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PREPARED  UNDER  THE  DIRECTION  OF 

FREDERICK  A.  CLEVELAND,  Ph.D. 


^ 


PUBLICATIONS  OF  THE  INSTITUTE  FOR 
GOVERNMENT  RESEARCH 

STUDIES  IN  ADMINISTRATION 

The    Financial    Administration    of 
Great  Britain 

Prepared  By 

William  F.  Willoughby 
Westel  W.  Willoughby 
Samuel  McCune    Lindsay 

The  Budget 

By  Rene  Stourm 

Edited  By  Walter  Flarius  McCaleb 

PRINCIPLES  OF  ADMINISTRATION 

Principles    Governing   the    Retire- 
ment of  Public  Employees. 

By  Lewis  Meriam 

D.   APPLETON   AND   COMPANY 

PublUhert  Nttw  York 


\«    f 


THE  BUDGET 

BY  RENE   STOURM 

MEMBRE  DE  t'lNSTITUT 

PRorsssEUR  A  l'ecole  oes  sciences  POLITIQUES 


A    TRANSLATION 

FROM  THE  SEVENTH  EDITION  OF  LB  BUDGET 
(COCRS  DE  finances),  PARIS,   1913 


THADDEUS  PLAZINSKI 

TRANSLATOR 

WALTER  FLAVIUS  McCALEB,  Ph.  D. 

EDITOR 
INTRODUCTION   BY 

CHARLES  A.  BEARD,  Ph.D. 

PROFESSOR  OP  POLITICS  IN  COLUMBIA  UNIVERSITY 


PUBLISHED    BY  * 

D.  APPLETON  AND  COMPANY 
NEW  YORK  ^    LONDON 

FOR    "    •^ 

THE  INSTITUTE  FOR  GOVERNMENT  RESEARCH 

1917 


6, 


'''"■ 


Copyright,  191 7,  by 
THE  INSTITUTE  FOR  GOVERNMENT  RESEARCH 


Printed  in  the  United  States  of  America 


FOREWORD 

As  the  title  page  of  this  book  indicates,  the  translation  was  made 
by  Mr.  T.  Plazinski.  The  manuscript  came  to  me  for  editing  only, 
and  while  I  have  modified  the  text  extensively,  it  is  still  that  of  the 
translator.  My  changes  have  mainly  dealt  with  the  expression  and 
not  the  sense,  and  only  where  some  question  was  raised  has  the 
text  been  rigidly  checked.  Those  who  are  experienced  in  the  matter 
of  translations  know  that  many  variations  may  flow  from  a  single 
phrase — almost  as  many  as  there  are  translators.  Hence  this  infirmity 
of  language  should  be  borne  in  mind  by  those  critically  inclined. 

Although  much  care  has  been  taken  in  its  preparation,  the  editor 
feels  it  is  his  duty  to  say  frankly  that  he  is  not  satisfied  with  the 
translation  of  this  notable  book.  However,  this'  could  hardly  be 
otherwise,  for  no  translation  is  ever  entirely  satisfactory.  Even  if 
the  sense  of  the  author  is  not  missed  on  occasion,  the  spirit  of  the 
work  defies  all  attempts  to  encompass  it. 

It  was  no  light  task  to  render  into  English  the  six  hundred  and 
twenty  pages  of  "Le  Budget" — even  leaving  out  of  consideration 
the  difficulties  presented  by  the  text.  In  the  first  place,  M.  Stourm 
wrote  with  the  evident  design  of  telling  a  story  of  institutional  devel- 
opment, largely  designed  for  a  French  audience.  While  his  story  is 
instructive,  even  entertaining,  not  infrequently  the  details  render  it 
difficult  to  get  a  clear  view  of  the  broad  principles  at  work  and  of 
the  conclusions  reached. 

In  faithfully  following  the  text,  not  infrequently  matter  was  in- 
cluded which,  from  the  viewpoint  of  its  use  to  American  readers, 
might  well  have  been  omitted.  The  form  of  the  discourse  is  also 
preserved.  For  instance,  M.  Stourm  has  occasionally  lapsed  into 
the  first  person,  but  we  have  not  ventured  even  to  vary  this  form 
of  his  narrative.  We  have  felt  that  it  was  not  for  us  to  attempt 
to  change  his  mode  and  manner  of  expression,  to  shape  his  meaning 
in  phrase  of  our  own,  but  rather  to  adhere  to  his  structure  and  to 
express  his  meaning  as  nearly  as  we  might — at  all  times  feeling  it 
a  duty  to  make  this  clear  to  an  English-speaking  and  particularly 
to  an  American-reading  public. 

With  this  clear  task  before  us,  at  times  we  have  despaired,  and 
the  shade  of  this  despair  has  been  dark  enough.     The  difficulties  of 


FOREWORD 

rendering  ofiicial  and  technical  French  into  the  English  language, 
barren  of  corresponding  terms,  can  be  appreciated  only  by  one  who 
has  attempted  it.  When  there  have  been  added  to  this  the  mysteries 
of  French  idiom,  a  combination  has  been  established  well-nigh  defy- 
ing the  ingenuity  of  any  translator.  Doubtless  we  have  at  times 
missed  the  exact  meaning.  For  all  these  errors  we  can  but  crave 
the  indulgence  of  both  author  and  reader. 

Just  a  word  on  the  technique :  We  have  been  compelled  in  some 
cases  to  adopt  French  terms  for  which  we  are  without  equivalents  in 
English,  as,  for  instance,  departement,  cour  des  comptes,  taxes 
assimilees,  ordonnateur,  etc.  We  feel  that  here  we  have  ample 
warrant  for  our  course.  Also  we  have  followed  M.  Stourm's  italics 
almost  without  exception  and  in  those  cases  we  have  used  quotation 
marks.  We  have,  too,  burdened  our  text  with  French  official  or 
technical,  terms  and  phrases,  in  parentheses,  which  appeared  to  us 
as  possibly  necessary  for  the  student  who  might  wish  to  pursue 
further  the  subject.  There  are  a  number  of  bracketed  addenda  and 
footnotes  which,  with  a  few  exceptions,  were  supplied  by  Dr.  Fred- 
erick A.  Cleveland,  under  whose  general  direction  the  translation 
was  undertaken,  who,  also,  took  occasion  on  nearly  every  page  to 
leave  the  marks  of  his  excellent  judgment.  While  effort  was  made 
to  locate  all  citations,  some  of  them  were  hopelessly  lost  in  foreign 
archives  and  we  were  forced  to  adopt  the  expedient  of  again  render- 
ing into  English  what  M.  Stourm  had  converted  into  French,  a 
perilous  venture  at  best.  Where  it  has  been  necessary  to  do  this 
the  half  quotation  mark  has  been  used. 

Another  liberty  has  been  taken:  To  make  the  book  conform  to 
the  style  of  the  series,  ''Studies  in  Administration,"  we  have  intro- 
duced marginal  sideheads,  and  revised  the  chapter  synopses  to  follow 
these  and  the  main  heads  of  the  chapter  subdivisions.  On  account 
of  delays  and  interruptions  in  the  foreign  mail  service,  it  has  appeared 
unwise  to  attempt  to  submit  these  to  the  author  for  approval  before 
publication. 

Walter  F.  McCaleb. 


VI 


INTRODUCTION 

The  translation  of  M.  Stourm's  "Le  Budget"  into  English  is  timely 
and  significant.     All^  about  us  are  signs  of  increasing  interest  in  fi-  '^^ 
nance  and  budget  making.   The  amount  of  literature  on  these  subjects 
already  available  in  the  United  States  is  proof  that  American  students 
and  publicists  are  aware  of  their  importance.    Moreover,  philosophizing  "^^ 
is  being  followed  by  action.     Even  if  the  protests  of  the  taxpayers  ' 
had  not  become  an  impelling  force  in  the  direction  of  budget  reform, 
the  difficulties  of  the  legislators  in  meeting  the  rising  cost  of  gov- 
ernment would  have  prepared  them  for  a  revision  of  their  obsolete 
methods.    The  work  has  already  been  begun  in  a  tentative  and  halt- 
ing way.    Evidences  are  to  be  found  in  the  Maryland  budget  amend- 
ment of  1916  and  in  the  recent  legislation  of  New  Jersey,  Minnesota, 
Nebraska,  Illinois  and  New  York.    In  response  to  the  outcry  against  ^-^' 
waste  and  extravagance  in  government,  four  of  the  national  parties 
in  1916  declared  in  favor  of  some  measure  of  budget  reform.    Poli- 
ticians most  vociferous  in  their  defense  of  practices  discredited  in 
every  other  civilized  nation  are  beginning  to  admit  that  all  is  not 
well.    Observant  leaders  in  Congress  and  state  legislatures  are  aware 
that  the  day  of  thorough -going  reconstruction  cannot  be  postponed 
much  longer. 

At  such  a  season,  it  is  fortunate  that  citizens  who  are  taking 
thought  about  the  matter  now  have  at  hand  M.  Stourm's  excellent 
treatise  on  the  art  and  practice  of  budget  making.  It  is  an  admir- 
able supplement  to  the  first  volume  of  this  series,  which  deals  with 
English  methods  alone.^  With  a  scholar's  respect  for  historical 
foundations,  the  author  describes  clearly  and  pertinently  the  leading 
steps  in  the  evolution  of  modern  fiscal  devices.  And  yet,  being  es- 
sentially practical  in  his  purpose,  he  gives  his  attention  mainly  to  a 
systematic  analysis  of  budget-making  processes  and  to  the  formula- 
tion of  concrete  answers  to  the  innumerable  questions  which  must 
arise  in  the  minds  of  those  who  are  seriously  interested  in  develop- 
ing the  most  effective  methods  of  preparing  estimates  of  appropria- 
tions, consolidating  and  reviewing  requests,  shaping  legislative  pro- 
cedure in  fiscal  matters,  and  securing  administrative  control  over 
spending  officers. 
*"The  Financial  Administration  of  Great  Britain,"/ 

vii 


INTRODUCTION 

In  addition  to  being  timely,  M.  Stourm's  treatise  is  of  special 
significance  for  the  United  States.  In  many  ways  the  experience  of 
France  has  been  more  akin  to  that  of  the  United  States  than  has 
the  experience  of  England.  The  first  French  republic  was  established 
only  a  few  years  after  the  Declaration  of  Independence.  Indeed  the 
famous  convocation  of  the  Estates  General,  which  really  opened  the 
French  Revolution,  was  in  the  spring  of  the  very  year  that  saw  the 
first  inauguration  of  Washington.  That  Revolution,  like  the  Amer- 
ican uprising,  took  the  form — at  least  so  far  as  government  was  in- 
volved— of  a  revolt  against  executive  authority.  In  France  and  the 
United  States  we  do  not  find,  as  in  England,  a  gradual  evolution 
of  democracy  in  which  the  executive  or  budget-formulating  branch 
of  the  government  was  subjected  to  legislative  control.  In  those 
countries  there  was  a  sudden  and  determined  revolt  against  kingly 
government  and  a  violent  overturning  of  the  authorities  against  which 
democratic  control  asserted  itself.  In  this  overturning,  executive 
authorities  were  supplanted  entirely  by  representatives  of  the  people 
— the  branch  of  the  government  which  was  designed  for  delibera- 
tion, rather  than  action,  because  the  very  idea  of  an  executive  had 
become  associated  in  the  minds  of  the  people  with  cruel  and  irre- 
sponsible rulers,  with  oppressive  taxation  and  arbitrary  administra- 
tive practices.  Louis  XVI  was  forced  to  call  the  Estates  General 
because  his  extravagance  and  inefficiency  had  brought  his  govern- 
ment to  the  verge  of  bankruptcy.  For  lack  of  support,  the  institu- 
tional retaining  walls  gave.  Then  came  the  deluge.  The  Third  Es- 
tate, exasperated  beyond  measure  and  taught  by  experience  to  dis- 
trust royal  promises,  subjected  the  crown  to  legislative  dominion 
and  then  in  a  short  time  overthrew  the  monarchy  altogether.  Arbi- 
trary executive  management  of  finances  having  failed  miserably,  by 
a  chain  of  reasoning  acceptable  to  the  masses,  legislative  management 
was  substituted  for  it.  ' 

This,  too,  was  what  was  done  in  the  United  States.  When  the 
official  representatives  of  George  III  were  driven  out,  the  people  re- 
sorted to  the  legislature  as  the  palladium  of  democracy.  The  repre- 
sentative body  could  do  everything.  In  some  states  even  the  term 
"governor"  was  not  used  because  it  savored  of  royal  despotism.  The 
French  and  American  "fathers"  wisely  determined  upon  securing 
liberty  at  any  cost.  And  they  so  planned  their  institutions — giving 
little  thought  to  things  needful  to  make  the  government  efficient.  In 
fact  one  of  the  purposes  to  be  achieved  was  inefficiency  so  far  as  the 
executive  was  concerned. 

In  the  French  Constitution  of  1791,  as  in  the  American  Constitu- 
tions, the  dominant  note  was  the  defense  of  the  individual  against 

viii 


INTRODUCTION 

governmental  interference.  Histotians  have  recorded  how  American 
state  constitutions  were  translated  into  French  and  widely  circu- 
lated in  Europe  on  the  eve  of  the  great  French  uprising,  and  no 
one  can  doubt  that  they  profoundly  influenced  French  thinking.  The 
remedy  for  the  evils  of  state  which  the  people  at  that  time  suffered 
was  thought  to  be  a  constitutional  declaration  of  rights  and  legisla- 
tive supremacy.  A  government  endowed  with  power  to  act  speedily 
and  effectively  was  regarded  as  dangerous  to  individual  liberty.  In- 
security of  persons  and  property  was  associated  with  arbitrary  gov- 
ernment in  the  eighteenth-century  mind.  There  seemed  to  be  more 
promise  for  mankind  in  weakness  than  in  strength.  Moreover,  be- 
fore the  age  of  steam  and  corporate  enterprise,  the  philosophy  was 
sound  enough,  although  there  were  grave  difficulties  in  the  way  of 
consistent  practice.  In  the  century  which  followed  the  Revolution, 
political  power  in  France  shifted  unsteadily  backward  and  forward 
between  the  legislature  and  the  executive,  until  at  last  there  was  . 
established  a  ceremonial  presidency  and  responsible  cabinet  govern- 
ment. 

For  citizens  of  the  United  States  there  are  many  lessons  in  the 
French  struggle  to  reconcile  strong  administration  with  popular  con- 
trol— to  establish  strong  leadership  and  to  safeguard  democracy. 
First  in  this  country  came  the  reaction  against  arbitrary  executive 
power,  so  strong  that  the  legislature  took  over  the  work  of  admin- 
istration as  well  as  of  legislation.  M.  Stourm  tells  us  of  the  efforts 
of  the  assemblies  of  1789  and  the  following  years — directed  not  alone 
to  securing  the  right  of  approving  or  disapproving  the  acts  and  pro- 
posals of  a  responsible  executive,  but  to  conducting  the  actual  admin- 
istration of  public  offices  and  of  finances  in  general  and  in  detail. 
It  is  not  necessary  to  criticize  this  development.  It  is  important 
rather  that  it  should  be  understood.  Having  suffered  from  the  un- 
doubted evils  of  an  arbitrary  monarch,  the  Third  Estate  bent  its 
energies  to  the  inhibition  and  then  to  the  destruction  of  his  authority. 
When  once  this  was  done,  however,  the  French  people  found 
that  they  had  government  by  irresponsible  committees  instead. 
Thus  Mirabeau,  the  great  leader  in  the  transformation  of  the 
Estates  General  into  the  National  Assembly,  finding  himself 
surrounded  by  a  hungry  crowd  of  representatives,  was  forced 
to  exclaim,  "I  never  hear  anything  but  that  ...  we  must  havej 
more." 

It  must  be  conceded  that  the  popular  assemblies  which  took  the   * 
place  of  the  absolute  monarchy  contributed  much  to  democracy  but 
little  to  efficient  administration.     The  wickedness    of    despots    was 
overborne,  but  other  evils  sprang  up.     In  the  place  of  the  king's 

ix 


^/ 


INTRODUCTION 

favorites  at  the  "pork  barrel,"  there  were  the  hungry  politicians  from 
the  provinces.  Without  questioning  the  immense  and  enduring  serv- 
ices of  the  French  Revolution  to  democracy,  one  cannot  help  observ- 
ing that  the  burden  of  extravagance  and  waste  thrown  upon  the 

y^  nation  can  hardly  be  said  to  have  been  lightened. 

When  the  revenues  failed  to  cover  expenditures,  the  assemblies 
resorted  to  paper  money.  As  American  boards  of  aldermen  issued 
fifty-year  bonds  to  pay  the  cost  of  ordinary  government,  so  the 
French  assemblies  issued  legal  tenders  to  meet  current  bills.  M. 
Stourm  observes:  "When  the  assignats  came  into  use,  every  calcu- 
lation, every  provision  for  the  future,  and  in  a  word  every  idea  of 
the  Budget  plan,  disappeared.  What  was  the  use  of  bothering  about 
a  balance  when  the  paper  revenues  would  most  assuredly  balance  the 
expenditure?"  By  inflation  and  numerous  borrowings,  the  French 
statesmen  were  able  to  cover  their  ever-growing  extravagance  and 
escape  the  day  of  reckoning.  Those  familiar  with  the  course  of 
American  financial  history  will  have  no  difficulty  in  drawing  parallel 
illustrations  of  their  own. 

Having  destroyed  unity  and  responsibility  in  the  government,  the 
French  made  the  individual  members  a  law  unto  themselves  by  per- 
mitting them  to  introduce  without  limit  measures  carrying  charges 
upon  the  treasury  and  to  use  the  power  of  trading  to  force  through 
their  special  and  local  demands.  "In  France  the  deputies. until  re- 
cently," says  M.  Stourm,  "had  the  power  of  proposing  individually 
and  at  will  any  increase  of  expenditures  and  any  reduction  of  reve- 
nues. The  initiative  of  the  Parliament  in  the  matter  of  the  Budget 
was  coincident  with  the  initiative  of  the  Executive  which  was  thus 
proportionally  reduced.  From  this  resulted  two  great  abuses :  An  open 
door  for  ill-advised  action  and  destruction  of  the  equilibrium  of  the 
Budget,  the  first  causing  the  second.  Ill-advised  action  was  inevi- 
table from  the  moment  each  deputy  was  permitted  to  set  forth  on 
the  floor  his  reasons  for  asking  an  increase  of  expenditures  or  for 
a  reduction  of  revenues,  according  to  his  individual  opinion  or  in 
behalf  of  his  constituency.  Such  pleadings,  studied  with  particular 
care  by  their  authors,  masterfully  presented,  often  with  passion, 
stood  a  good  chance  for  influencing  the  Assembly.  In  a  general 
way,  however,  it  should  be  noted  how  matters  of  taxation  or  public 

L  expenditures  treated  separately  and  without  regard  to  balance  became 
misleading.  A  suggestion  to  increase  the  appropriation  for  some 
,  branch  of  service  in  need,  to  increase  the  salaries  of  subordinate 
employees  insufficiently  paid,  or  to  increase  the  pensions  of  former 
servants  of  the  State  or  those  of  poor  members  of  mutual  aid  so- 
cieties, etc.,  to  make  an  appeal  to  the  generosity  qf  the  h^art  gr 


INTRODUCTION 

patriotic  pride  of  the  auditors,,  is  an  easy  way  to  achieve  an  irresistible 
success." 

In  the  matter  of  legislative  procedure  upon  appropriation  bills, 
the  French  experience  for  a  long  time  paralleled  that  of  the  United 
States.  When  the  King  was  overthrown,  Parliament  began  to  do  its 
work  through  committees.  Thus  responsibility  for  expenditures  was 
transferred  from  the  King  to  the  assembly  and  from  the  assembly 
to  the  committee  room,  each  committee  becoming  a  small  legislature 
with  almost  absolute  authority  over  the  business  committed  to  it. 
Parliament  was  reduced  to  the  level  of  a  mere  ratifying  body.  Com- 
mittees became  jealous  of  their  powers.  If  a  member  resisted  action 
of  a  committee  of  which  he  was  not  a  member,  he  jeopardized  not 
only  his  personal  measures,  but  also  those  of  the  committee  upon 
which  he  served.  Debate  upon  measures  thus  became  as  futile  as 
in  the  New  York  State  legislature.  Although  within  recent  years, 
as  M.  Stourm  points  out,  there  have  been  many  modifications  in  com- 
mittee government  and  although  attempts  have  been  made  to  adjust 
it  to  the  necessities  of  executive  leadership  and  efficient  administra- 
tion, there  are  still  remnants  of  the  old  decentralization  that  remind 
us  of  the  American  system. 

In  M.  Stourm's  record  of  the  development  of  the  appropriation 
bill,  the  reader  will  likewise  find  many  passages  that  seem  familiar. 
In  the  early  days  the  appropriation  bill  in  France  embraced  only  one 
item.  Gradually  the  legislature  resolved  upon  a  higher  and  higher 
degree  of  itemization  until  at  last  it  undertook  to  list  in  advance 
hundreds  of  petty  details  which  should  have  been  left  to  executive 
discretion.  In  reading  these  chapters  from  French  history  we  are 
constantly  reminded  of  President  Wilson's  illuminating  treatise  on 
"Congressional  Government." 

It  must  not  be  thought  that  this  system  was  without  its  opponents 
even  among  early  French  parliamentarians.  But  reform  was  long 
postponed.  Expenditures  steadily  mounted  and  the  public  debt  in- 
creased to  alarming  proportions.  At  length  men  of  financial  experi- 
ence, like  M.  Ribot,  declared  that  the  right  of  private  members  to 
initiate  money  bills  enabled  the  most  active  and  the  noisiest  rather 
than  the  most  deserving  to  reap  the  benefits.  Finally  some  very  in- 
teresting changes,  duly  reported  by  M.  Stourm,  were  introduced. 
The  executive,  that  is,  of  course,  the  responsible  cabinet,  was  en- 
abled to  take  the  initiative,  and  individual  members  were  deprived 
of  the  right  to  exercise  functions  which  should  be  attached  to  ac- 
knowledged leadership.  But  France  did  not  go  the  whole  length 
and  adopt  the  British  practice  in  this  matter.  As  M.  Stourm  ob- 
serves, "This  attempt  to  make  the  executive  responsible  for  initiating 

xi 


INTRODUCTION 

the  Budget  has  been  resisted  until  there  is  little  prospect  in  the  near 
future  of  the  principle  obtaining  the  support  which  it  deserves.  The 
only  thing  that  can  be  done  is  for  the  practice  to  remain  as  at  pres- 
ent and  for  the  modification  referred  to  above  to  render  such  service 
as  it  may,  until  a  wave  of  economy  gives  it  a  broader  application." 

Slowly  in  France  the  idea  was  evolved  also  that  the  business  of 
the  nation  should  be  handled  as  a  whole  in  a  broad  and  intelligent 
way.  It  then  became  necessary  to  break  down  little  monopolies  of 
committees  and  administrative  bureaus  and  to  bring  all  revfenues  and 
expenditures  under  review  as  a  single  national  plan.  M.  Stourm  re- 
\^  lates  the  history  of  this  effort  and  of  the  opposition  on  the  part  of 
the  bureaucracy — legislative  and  administrative.  In  going  through 
these  pages,  one  imagines  that  he  is  reading  a  description  of  Amer- 
ican legislatures  and  administration.  It  was  found  during  the  reform 
movement  in  France  that  institutions  and  divisions  of  government 
which  had  long  been  receiving  appropriations  as  a  matter  of  course 
had  grown  to  regard  their  revenues  as  private  property  and  were  un- 
!  willing  to  surender  any  part  of  their  incomes  or  even  to  give  a  full 
\  i  accounting  of  their  own  operations  and  the  uses  to  which  their  funds 
were  put.  Millions  of  francs  were  hidden  away  in  little  side  pockets 
of  the  administration  and  it  required  all  the  ingenuity  and  determina- 
tion of  statesmen  driven  to  desperation  by  financial  distress  to  break 
down  the  system  of  special  funds  and  continuing  appropriations. 

The  one  thing  that  seems  necessary,  in  M.  Stourm's  view,  to  per- 
fect French  practice  is  to  follow  the  lines  of  English  experience  to 
their  logical  conclusion.  He  gives  it  as  his  personal  opinion  that 
England  has  outdistanced  all  other  nations  in  financial  management. 
^/He  especially  commends  the  spirit  and  purpose  of  the  British  rule  of 
1706,  which  places  the  responsibility  for  the  initiation  of  appropria- 
tion measures  solely  upon  the  executive  branch  of  the  government, 
and  deprives  the  House  of  Commons  of  the  power  to  add  to  the  de- 
mands made  upon  the  treasury  by  the  executive.  In  passing,  it  is 
interesting  to  note  that  M.  Stourm  has  ancient  and  honorable  au- 
thority for  his  view.  More  than  a  century  ago  that  famous  Minister 
N  of  Finance,  Necker,  said:  "The  National  Assembly  made  a  mistake 
by  requiring  its  committees  to  give  an  account  of  the  condition  of 
finances.  This  is  a  mission  which  the  National  Assembly  should  have 
left  to  the  chief  of  the  Department  of  the  Public  Treasury,  reserving 
only  to  the  commissioners  appointed  by  the  Assembly  the  right  of 
revision  and  control  of  the  accounts." 

It  is  not  necessary  to  cite  further  parallels  in  order  to  show  that 
M.  Stourm  has  a  distinct  message  for  this  country.  In  closing,  how- 
ever, it  is  worth  while  to  call  attention  to  another  outstanding  feature 

xii 


INTRODUCTION 

of  his  volume.  In  these  pages  we  find  how  inadequate  is  the  notion, 
entertained  in  many  quarters  in  the  United  States,  that  a  complete 
budget  system  can  be  installed  by  a  brief  act  of  the  legislature  pro- 
viding for  executive  preparation  and  submission  of  estimates. 

As  the  New  York  Bureau  of  Municipal  Research  has  properly 
warned  us :  ^  "It  might  as  well  be  said,  once  for  all,  that  a  budget 
system  involves  fundamental  executive  and  legislative  practices,  care- 
fully devised  accounting  methods,  adequate  expert  service,  efficient 
record  keeping  and  work  reporting — in  short,  all  of  the  processes  of 
good  management.  This  is  so  in  England,  it  is  so  in  Germany,  it  is^ 
so  in  France,  it  is  so  in  Japan,  in  Canada,  and  in  every  country 
where  a  budget  system  is  in  operation,  even  though  there  are,  of 
course,  certain  differences  in  procedure.  It  involves  an  abandon- 
ment on  the  part  of  the  public  of  the  traditional  attitude  that  the 
treasury  exists  for  the  satisfaction  of  local  needs.  It  involves  the 
training  of  public  servants  equipped  to  operate  a  system  based  on 
sound  business  principles.  Whoever  expects,  therefore,  to  rush  a  " 
'budget  biir  through  the  coming  legislature  and  to  see  an  immediate  ^ 
revolution  in  finances  is  destined  to  be  disappointed.  Advocates  of 
a  budget  system  have  before  them  a  season  of  scientific  research  into 
accounting  and  reporting  methods,  civil  service  practices,  public 
works  management,  cost  measurement  and  record  keeping.  More- 
over, they  have  before  them  a  long  campaign  of  public  education." 
M.  Stourm's  volume  is  an  eloquent  commentary  on  the  complexity  of 
the  budget-making  process. 

Charles  A.  Beard. 
May  II,  ipi/. 

*  See  No.  80  of  "Municipal  Research." 


Xlll 


AUTHOR'S  PREFACE 

This  new  edition  makes  no  change  in  the  arrangement  of  subjects 
previously  adopted,  and  contains  exactly  the  same  number  of  pages 
as  the  edition  of  1909.  Have  there  been  no  changes  in  budgetary  his- 
tory and  ideas  during  the  past  four  years?  If  this  were  the  case,  it 
would  be  rather  surprising.  The  changes  which  have  been  made  con- 
sist primarily  of  the  progressive  development  in  practices,  good  or 
bad,  already  indicated;  on  the  one  hand,  there  has  been  an  in- 
crease in  expenditures,  and  on  the  other,  greater  strictness  as  to  for- 
malities [procedure]  has  been  observed — two  things  which  seem  in  a 
sense  to  contradict  one  another. 

Expenditures — already  alarming  in  1889,  1891,  1896,  1900,  1906  and 
1908,  as  shown  in  an  impressive  way  by  the  extracts  from  the  prefaces 
printed  below — in  the  last  few  years  have  shown  new  and  consider- 
able increases.  The  budget  for  1913,  without  speaking  of  unavoidable 
additional  appropriations  and  excluding  the  expenditures  for  Morocco 
and  other  regrettable  items,  reached  the  figure  of  4,664,000,000  francs. 
This  exceeded  the  most  pessimistic  anticipations.  Everybody  is  dis- 
quieted but  helpless — the  Minister  of  Finance,  the  budget  commis- 
sions, speakers,  writers,  and  undoubtedly  the  whole  country,  although 
the  manifestations  are  not  sufficiently  outspoken. 

The  thing  which  most  perplexes  the  cautious  mind  is  the  impossi- 
bility of  discovering  anything  on  which  to  base  a  hope  for  the  future 
curbing  of  these  excesses.  In  the  last  resort,  the  evil  might  be  en- 
dured, as  France  is  financially  strong,  if  this  condition  had  been 
brought  about  by  a  specific  expenditure  or  through  the  operation  of  a 
limited  program  to  be  concluded  within  a  given  period  of  time.  But 
nothing  is  limited  and  nothing  is  temporary  in  the  multiplied  increases 
of  appropriations  constantly  granted  to  the  ministers,  the  total  of 
which  is  huge — disbursals  we  should  hesitate  at  calling  waste  but 
which  certainly  do  not  deserve  the  term  economy.  Grave  events  alone 
will  some  day  put  an  end  to  these  destructive  practices,  leaving  to  us, 
however,  the  burden  occasioned  by  the  irreparable  errors  of  the  past. 

Unfortunately,  neighboring  countries  encourage  this  constant  in- 
crease of  expenditures  by  their  example,  which  example,  however,  is 
conservative.  In  England,  the  evil  is  restricted  to  expenditures  for 
the  Army,  the  Navy,  and  for  social  betterment — the  limits  of  which 

XV 


AUTHOR'S  PREFACE 

may  soon  be  reached.  The  plague  of  additional  appropriations,  which 
in  our  country  [France]  affects  all  the  ministries,  occurs  in  England 
only  in  exceptional  cases,  as  for  instance,  in  connection  with  the  Navy 
in  July  1912.  As  a  rule,  at  the  year's  end  the  Chancellor  of  the  Ex- 
chequer regularly  renders  accounts  showing  disbursed  expenditures 
lower  than  the  amounts  actually  voted.  We  are  not  considering  in 
this  connection  the  large  amortizations  practiced  in  connection  with 
the  English  public  debt,  which  is  smaller  than  ours,  nor  do  we  include 
surpluses  of  revenues  by  which  the  budgets  are  very  materially  sup- 
plemented. The  statistics  of  German  finances,  of  the  Empire  as  well 
as  of  the  individual  States,  show  considerable  increases  of  appropria- 
tions and  of  debt  since  1871.  During  the  past  few  years,  however, 
the  total  of  extraordinary  expenditures  has  decreased  materially.  Fur- 
thermore, regardless  of  the  degree  of  intensity  of  the  budgetary  devel- 
opment in  these  countries — much  more  recently  and  much  less  heavily 
indebted  than  ours — we  discover  in  them  the  existence  of  considerable 
taxable  resources  available  in  case  of  necessity,  not  found  elsewhere. 
As  yet  the  budgetary  levies  have  not  exhausted  the  taxable  substance. 

The  second  phenomenon,  the  development  which  has  kept  pace  with 
increasing  expenditures,  lies,  as  has  been  stated,  in  greater  strictness 
of  budgetary  regulations  (formalites) .  It  is  obvious  that  strict  regu- 
lations do  not  succeed  in  checking  the  rising  tide  of  expenditures,  but 
they  guarantee  the  order,  the  clearness,  and  the  regularity  of  budge- 
tary operations.  This  means  much,  much  more  than  the  public  at 
large  realizes.  It  follows  that  officials  charged  with  carrying  budgets 
into  effect  commit  no  error.  All  ministers  of  finance,  executives  re- 
porting to  commissions,  speakers,  members  of  the  legislature,  under- 
stand this  fact  so  well  that  they  address  themselves  with  zeal,  as  we 
have  mentioned  elsewhere,*  to  the  task  of  setting  up  regulations  to 
y  prevent  abuses.  This  struggle,  which  characterizes  the  present  epoch, 
has  doubled  in  intensity  during  the  last  few  years.  Not  only  did  the 
law  of  July  13,  191 1,  specify  and  widen  the  functions  of  comptrollers 
of  expenditures  appointed  to  all  ministries,  but  the  decrees  of  May 
(  13  and  August  31,  191 1,  organized  the  machinery  to  make  the  reports 
of  the  Cour  des  Comptes  (Court  of  Accounts)  effective,  and  to  pre- 
vent the  criticisms  made  in  its  annual  reports  from  becoming  dead 
letters.  The  decrees  above  mentioned  have  had  the  approval  of  all 
the  members  of  the  Cabinet. 

Another  decree  of  August  31,  191 1,  approved  in  the  same  way,  re- 
quires that  the  comptrollers  of  expenditures  appointed  to  all  the 
ministries  shall  meet  every  three  months  at  the  office  of  the  Minister 

^  See  our  article,  "L'armature  des  budgets,"  in  the  Economiste 
Fran^ais  for  June  8,  1912. 

xvi 


AUTHOR^S  P^FACE 

of  Finance,  under  the  chairmanship  of  the^director  general  of  public 
accounts.  Finally,  the  decree  of  October  6^1912,  sets  in  motion  the 
machinery  of  special  control  (an  interministe^al  commission) — com- 
posed of  the  ministries  of  War,  the  Navy,  the  Colonies,  the  Interior, 
and  Finance — which  is  to  focus  its  attention  on  the  execution  of  the 
budget  and  to  examine  into  the  question  of  regularity  and  conformity 
with  the  votes  of  the  legislature,  under  the  high  authority  of  the  Min- 
ister of  Finance. 

The  present  tendency,  then,  is  to  place  the  ministers— issuing  pay- 
ment vouchers  and  therefore  acting  primarily  in  a  disbursing  capacity 
— under  the  control  of  the  Minister  of  Finance,  who  will  naturally 
strive  to  be  economical  because  he  alone  is  responsible  for  the  equilib- 
rium of  the  budget.  Generally  speaking,  the  program  followed  with 
new  vigor  during  the  past  few  years  may  be  recapitulated  as  follows : 
Maintenance  of  the  unity  of  the  budget,  improvement  of  its  plan,  su\ 
pervision  of  dark  corners  and  of  divided  interests,  avoiding  confusion 
as  between  revenues  and  expenditures,  struggling  against  additional 
appropriations,  against  waste,  or  rather  against  plunder  and  against 
annulments,  compelling  the  disbursing  agents  to  observe  scrupulously 
the  decisions  of  the  legislature,  carefully  guarding  credit  commit- 
ments, closely  supervising  the  carrying  into  effect  of  the  budget,  com- 
pelling the  agents  engaged  in  this  service  to  render  accounts.  This  is 
pretty  nearly  the  list,  more  congested  than  ever,  of  matters  contained 
in  the' present  book,  which  is  devoted  exclusively  to  the  description  of 
regulations,  stripped  of  illusions  as  to  their  possible  influence  upon 
the  growth  of  expenditures.  The  expenditures  grow  because  the  leg-  ^ 
islature  wants  them  to  grow.  No  regulation  of  itself  can  possibly 
prevent  this  growth.  In  the  wisdom  of  the  legislature  lies  the  only 
hope  for  the  country.  "" 

Regulations,  however,  prepare  the  way  for  wise  legislation.  They 
warn  the  chambers  of  infractions  which  have  been  ascertained,  of 
irregularities  and  mistakes  committed,  thus  enabling  them  either  to 
continue  in  their  course  or  to  reform.  Beyond  this,  matters  are  set 
out  in  order  and  clearly,  so  that  the  country  may  know  the  condition 
of  its  affairs  and  something  of  the  road  on  which  it  moves  with  the 
attendant  dangers.  Finally,  the  regulations,  accompanied  by  their 
commentaries,  distinguish  between  the  good  and  the  bad,  the  success 
and  the  failure  of  every  measure,  on  the  basis  of  past  experience, 
marking  the  reefs  on  which  foundered  in  former  times  the  argosies 
of  finance,  the  emergency  measures  that  were  used,  the  causes  of 
periods  of  prosperity,  the  origins  of  new  regulations,  the  examples  of 
neighboring  countries.  Already  a  certain  degree  of  wisdom  has  been 
displayed,  making  possible  the  assembling  of  regulations  which  may 

xvii 


/ 


AUTHOR'S  PREFACE 

prove  susceptible  of  bringing  about  such  results,  and  of  teaching 
such  lessons.  Possibly  we  shall  then  be  excused  for  having  devoted 
to  their  study  a  book  of  620  pages,  particularly  if  this  digest  of  regu- 
lations shall  be  followed  by  a  spontaneous  and  real  outburst  of  wis- 
dom on  the  part  of  the  legislature,  which  shall  finally  restore  a  reign 
of  economy. 

Bercenay-en-Othe, 

November,  1912. 


Extract  from  the  Preface  of  the  Sixth  Edition 


On  two  occasions,  in  1789  and  at  the  end  of  the  Directorate,  the 
finances  of  the  country  sank  into  chaos,  with  nobody  able  to  strike  a 
balance.  Today,  however,  sharp  lights  disclose  the  blind  progress  of 
the  budgets  toward  a  future  of  expenditures  without  limit  and  of 
taxes,  without  measure,  but  the  balance  sheet  of  the  present  public 
wealth,  if  it  had  to  be  made,  would  be  absolutely  correct.  The  scien- 
tists of  the  future  will  not  need  to  glean  imaginary  figures  in  order  to 
reconstruct  it. 

Such  a  statement,  including  the  excessive  expenditures,  would  dis- 
close abnormal  and  rather  alarming  characteristics.  It  is  like  a  too 
well-kept  road,  too  smooth,  too  level,  which  tempts  the  audacious  trav- 
eler to  exaggerate  his  pace,  to  rush  at  top  speed  toward  the  unknown, 
without  possibility  of  foreseeing  the  end  of  his  foolish  race.  Thus, 
the  formal  budgetary  restrictions  seem  to  have  become  the  accom- 
plices of  the  abuses  of  which  we  are  the  witnesses.  However,  one 
cannot  reproach  them  for  only  partially  protecting  us,  nor  accuse 
them  of  abuses  which  they  only  try  to  curb.  Their  merits,  on  the 
contrary,  stand  out  clearly  against  the  evils  just  mentioned,  which 
grow  out  of  the  confusions  arising  from  disorganized  finances.  Chaos, 
the  forerunner  of  ruin,  is  their  primordial  enemy,  and  it  is  already  a 
big  task  to  preserve  the  budgets  from  chaos.  As  long  as  one  sees 
clearly,  it  is  possible  to  avoid  the  reefs  most  to  be  dreaded.  Further- 
more, is  it  not  possible  that  some  day,  under  the  inspiration  of  this 
vision,  the  country  may  finally  become  aware  of  the  perils  of  its 
extravagances  and,  while  there  is  time,  return  to  the  sane  practice  of 
economy  ?  This  would  mean  a  real  triumph  for  the  budgetary  rest^-ic- 
tions.  The  latter,  by  the  way,  have  only  the  most  honest  purposes; 
their  fault  is  temporary  lack  of  results.  Who  can  number,  however, 
the  many  ignored  cases  in  which  their  modest  activity  prevented  or 
mitigated  the  evil?  Why,  therefore,  should  one  lack  the  courage  to 
extol  them,  to  show   the  details   of  their   scientifically   complicated 

xviii 


AUTHOR'S  PREFACE 

mechanism,  to  recall  their  origin,  to  expose  to  the  light  their  reason 
for  existence  and  the  salutary  mission  they  have  to  fulfill? 

Bercenay-en-Othe, 

November,  ipo8.  ^ 

Extract  from  the  Preface  of  the  Fifth  Edition 

The  idea  of  economy,  notwithstanding  its  small  success  in  the  budg- 
ets of  the  State,  lies  at  the  bottom  of  the  French  mind.  But,  while 
in  our  country  individuals  economize  with  obstinacy,  the  representa- 
tives of  these  very  same  individuals,  charged  with  their  collective  in- 
terests, abandon  themselves  to  extravagance  with  equal  obstinacy. 
The  actual  totals  of  the  French  budget  for  1906  exceed  3,700,000,000 
francs,  without  speaking  of  future  additional  credits  [appropriations]. 

Here  would  seem  to  be  a  case  for  discouragement,  for  abandonment 
of  praised  principles  which  appear  to  lack  opportunity  of  application, 
but  there  are  motives  which  not  only  oppose  but  urge  perseverance. 

January,  ipo6. 

Extract  from  the  Preface  to  the  Fourth  Edition 

In  1896  the  French  budget  plan  for  1897  with  its  3,387,000,000 
francs  looked  enormous  compared  with  the  3,150,000,000  of  1890. 
During  this  period  of  seven  years,  the  expenditures  increased  230,000,- 
000.  We  termed  it  an  "alarming  phenomenon."  This  phe- 
nomenon does  nyt  cease  to  recur;  and  its  very  persistence  renders  it 
more  alarming. 

We  attempted  last  year,  in  an  article  in  the  Econofmste  frangais,^ 
to  calculate  what  our  budgets  are  likely  to  be  about  the  middle  of  the 
century.  At  the  present  rate  of  increase  the  3,500,000,000  francs  of 
1899  would  be  doubled  in  1947.^    The  figures  of  1901  already  exceed 

^  Economiste  frangais  for  December  16,  1899:  "La  Restauration 
financiere." 

2  Here  is  given  a  table  of  the  estimates  of  future  budgets  cited  in 
that  article: 

Budget  of  1900  3,500,000,000  francs 

"        "  1901  3,552,500,000      " 

"        "  1902  3,605,800,000      " 

"        "  1 910  4,060,800,000      " 

"  1915  4,374,400,000      " 

"        "  1920  4,713,400,000      " 

! .  "       "  1925  5,076,800,000  " 

"      "  1937  6,069,300,000  " 

!_        "        "  1945   7>o55.5oo.ooo  "  .,         . 

xix 


AUTHOR'S  PREFACE 

the  prediction.  Shall  this  be  the  case  to  the  end?  Taking  the  aver- 
age, it  is  to  be  feared  that  the  figures  will  be  found  to  be  right.  If, 
therefore,  the  budgets  of  France  should,  in  the  middle  of  the  century, 
^^'^^  really  reach  7,000,000,000  francs,  what  is  to  become  of  the  tax- 
payers? .  .  .  The  fable  of  the  man,  proud  of  carrying  a  young  steer 
the  weight  of  which  finally  overwhelmed  him,  is  sufficiently  familiar. 
September,  ipoo. 


Extract  from  the  Preface  to  the  Third  Edition 

The  French  fiscal  system,  even  if  casually  approached,  looks  for- 
midable enough  to  inspire  prospective  reformers  with  respect.  Shaped 
by  the  Revolution  and  by  succeeding  regimes  for  nearly  a  century,  its 
waves  of  progress  and  retrogression  shown  in  the  course  of  this  vol- 
ume, form  particularly  encouraging  symptoms.  .  .  . 

Everything  has  an  end,  however,  even  the  good  humor  of  the  tax- 
payers. And  from  one  moment  to  another  conditions  may  set  them 
in  opposition.  Accordingly,  we  entertain  no  illusions  as  to  believing 
that  the  present  regime  of  increasing  expenditures  can  continue  in- 
definitely. Let  us  be  satisfied  in  knowing  that  we  have  more  of  for- 
bearance than  our  neighbors  can  possibly  claim  for  themselves,  and 
that,  notwithstanding  the  heavy  budgets,  which  are  forced  upon  us  by 
dangerous  conditions,  the  marvelous  regularity  in  the  payment  of 
taxes  may,  after  all,  indicate  that  we  are  willing  to  show  our  patri- 
otism by  substantial  monetary  sacrifices.^  But  let  us  acknowledge  that 
the  moment  has  arrived — it  arrived  long  ago — for  changing  the 
method.  -'  • 

September,  i8p6. 

Extract  from  the  Preface  to  the  Second  Edition 

The  abolition  of  the  budgets  of  extraordinary  resources  has  just 
been  accomplished  in  France,  thus  making  the  first  step  toward  the 
unity  of  the  budget.  One  can  hope,  therefore,  soon  to  see  the  guar- 
anty:-©^ interest  in  the  text  of  the  ordinary  budget,  as  the  budget  plan 
fpr  1892  proposed  to  include  guaranties  of  interest  on  the  railways  of 
Algiers;  But,  for  the  time  being,  our  budgets  still  consist  of  four 
parts,  not  totaled  up  (instead  of  five  parts  as  in  former  times),  and 
their  operations  remain  obscure  and  entangled.  Additional  appropria- 
tions, after  the  excessive  ones  of  1881  to  1885,  appear  to  have  been 

^  See  our  article,  "Le  Tresor  de  Guerre,"  in  the  Revue  de  Paris,  for 
March  i,  1896. 

XX 


AUTHOR'S  PREFACE 

checked  two  years  ago.    Today,  the  tendency  again  to  increase  mani- 
fests itself  and  the  nature  of  the  demands  again  becomes  alarming. 

In  England  additional  appropriations  are  nearly  unknown.  Two 
years  ago  Mr.  Goschen  stated,  with  a  justified  feeling  of  pride,  that 
he  did  not  have  to  ask  for  a  supplement  during  the  fiscal  year  1887- 
1888.  The  year  1890-1891  balanced  with  a  surplus  of  revenues  of  43,- 
900,000  francs;  while  162,500,000  francs  had  been  used  for  the  amorti- 
zation of  the  public  debt.    This  is  undoubtedly  a  situation  to  be  envied. 


Italy,  owing  to  her  heeding  of  sound  principles,  has  already  suc- 
ceeded in  emerging  victoriously  from  her  former  difficulties.  About 
1880  she  appeared  to  reach  a  sound  basis  of  prosperity.  Let  us  hope 
that  Italy's  faith  in  the  fiscal  rules  may  be  rewarded,  if  she  but  per- 
sist in  following  them. 


In  the  United  States  public  expenditures,  particularly  appropria- 
tions for  military  pensions,^  developed  in  a  disturbing  way.  In  1878 
the  number  of  veterans  from  the  War  of  Secession  drawing  pensions 
did  not  exceed  223,000.  Since  then  they  have  multiplied,  their  num- 
ber today  reaching  about  538,000;  they  draw  annually  in  pensions 
533,000,000  francs;  it  is  estimated  that  they  will  impose  on  future 
budgets  a  burden  of  800,000,000  francs.  The  American  Treasury  is 
perhaps  the  only  one  in  the  world  which  could  stand  such  a  drain. 


The  present  revolution  in  Chile  resulted  wholly  from  the  conflict 
which  arose  over  finances  between  the  chief  executive  and  the  legis- 
lature. In  July,  1890,  in  connection  with  the  bill  for  revenues,  certain 
difficulties  of  a  constitutional  nature  suspended  their  collection  for 
three  weeks  throughout  the  country.  On  January  i,  1891 — as  Presi-' 
dent  Balmaceda  put  into  execution  on  his  own  authority  the  budget 
of  expenditures,  which  the  chambers  had  refused  to  vote — the  parti- 
sans of  Congress  appealed  to  arms  and  gave  the  signal  for  a  general 
uprising. 
August  J  i8pi. 

*  "The  most  menacing  specter  today  endangering  the  security  of  the 
Government  and  the  happiness  of  the  people  is  the  brazen  and  mis- 
chievous extravagance  in  our  public  expenditures.  I  believe  this  to  be 
the  most  monstrous  offspring,  born  of  governmental  perversion." 
(Speech  of  Mr.  Cleveland,  quoted  in  an  article  of  M.  Moireau,  in  the 
Revue  dcs  Deux  Mondes,  of  July  i,  1891.) 

xxi 


J 


AUTHOR'S  PREFACE 

Extract  from  the  Preface  to  the  First  Edition 

Of  the  three  divisions  of  the  program :  Budget,  taxes,  and  extraordi- 
nary resources,  only  the  first,  the  budget,  forms  the  subject  of 
this  book. 

The  experiences  of  my  administrative  career  have  been  of  great 
help  to  me  in  my  work.  Having  had  a  close  view — in  the  office  of  the 
general  inspector  of  finances,  in  the  cabinet  of  the  Minister  of  Fi- 
nance, in  the  office  of  the  secretary  general,  and  in  the  administration 
of  indirect  taxes — of  the  operations  of  the  machinery  of  the  budget 
under  various  aspects,  I  have  thought  to  support  my  work  as  fre- 
quently as  possible,  by  examples  drawn  from  practical  experience,  in 
arriving  at  my  deductions  in  the  science  of  finance. 

Besides,  the  road  in  this  direction  has,  for  a  long  time,  been  offi- 
cially traced.  Beginning  with  1 871 -1872,  M.  Paul  Leroy-Beaulieu  be- 
gan his  course  in  the  £cole  des  Sciences  Politiques.  Then  he  wrote 
his  two  volumes,  Traite  de  la  science  des  finances,  which  are  gener- 
ally known.  Even  today  his  pupils  recognize  no  financial  writer  other 
than  their  first  illustrious  teacher.  Anyone  who  comes  to  lecture  be- 
fore them  must  strain  himself  to  imitate  M.  Paul  Leroy-Beaulieu,  if, 
while  lecturing,  he  does  not  wish  to  hear  them  turning  the  pages  of 
the  work  which  everyone  consults  on  these  subjects. 

M.  Paul  Leroy-Beaulieu  occupied  the  chair  of  finance  at  the  £cole 
des  Sciences  Politiques  from  1871-1872  until  1880.  After  him,  the 
chronological  list  of  professors  contains  the  following  names: 

M.  Alfred  de  Foville,  1879-1880  to  1883. 

M.  Rene  de  Laboulaye,  1883-1884. 

M.  Leon  Say,  1884. 

Such  predecessors  have  rendered  difficult  my  task.  From  the  bot- 
tom of  my  heart,  I  must  express  my  thanks  to  my  attentive  and  loyal 
students  with  whom  at  all  times  I  have  endeavored  to  sympathize; 
finally,  to  their  director,  our  eminent  director,  M.  Boutmy.  He  has 
guided  me  from  the  first,  and  made  me  accept — with  show  of  grati- 
tude on  his  part,  a  rare  thing — advice  of  which  I  was  sorely  in  need. 

September,  i88p. 


xxii 


CONTENTS 


INTRODUCTION 
THE  BUDGET  AND  THE  BUDGETARY  PREROGATIVE 

CHAPTER  PAGE 

I.  Definition  of  the  Word  "Budget" — Budgetary  Prerog- 

ative          .1 

Definition  of  the  Budget;  The  Right  to  Control  the  Purse; 
Revolutions  of  1648  and  of  1688  in  England;  War  for  the 
Independence  of  the  United  States;  Conflicts  Over  the 
Budget  in  Prussia  in  1862  and  1866. 

II.  Contest  Over  Control  of  the  Purse  in  France     .        .      24 

The  Etats  Generaux  Until  the  Year  1614;  The  Parlements 
and  the  Beds  of  Justice ;  Modern  Budgetary  Systems. 


PART  I 
PREPARATION    OF   THE   BUDGET 

III.  The  Framers  of  the  Budget 51    / 

Executive  Power,  Budgetary  Initiative  in  France  and  in 
England;  Agencies  Cooperating  in  the  Preparation  of  the 
Budget;  The  Ministers  of  Finance,  the  Chief  Holders  of 

This  Portfolio  in  France — Sully,  Colbert,  Necker,  de  Vil- 
lele,  Napoleon,  Thiers;  Character  of  Advisory  and  Staff 
Divisions;  Supremacy  of  the  Bureau  of  Treasury  in  Eng- 
land. 

IV.  Time  of  Preparing  the  Budget 96 

Time  of  the  Preparation  of  the  Budget  in  France;  Finan- 
cial Period,  Plan  of  1819;  Opening  Dates  of  Fiscal  Year 

in  Foreign  Countries;  A  New  Plan  of  Changing  the  Date 
of  Fiscal  Year  in  France,  Rejected  in  1888;  Les  Dou- 
siemes  Provisoires;  Necessity  of  Bringing  the  Estimates 
Closer  to  Actual  Facts. 

V.  The  "Fiscal  Period"  and  the  "Administrative  Period"  .     115 

Economic  Period,  "The  Year" ;  Advantages  of  Accounting 
by  Fiscal  Periods;  Their  Disadvantages;  Accounting  by 
Administrative  Periods;  Mixed  Reform  Recommended  by 
Baron  Louis. 

xxiii 


CONTENTS 

CHAP  PAGE 

VI.  Universality  and  Specialization I44 

The  Rule  of  Universality;  Expenditures;  the  Coiir  des 
Comptes;  Principle  of  Universality  as  Applied  to  the  Budg- 
ets of  England,  Prussia,  Belgium  and  Italy;  The  Merits 

of  the  Principle  of  Universality;  The  Rule  of  Specializa- 
tion Opposed  to  the  Rule  of  Universality. 

VII.  Budgetary  Estimates  of  Revenues  and  Expenditures  169 
Need  for  Accurate  Basis  for  Forecasting;  Method  of 
Estimating  Revenues;  System  of  Increases  (Estimating); 
System  of  Direct  Estimating;  Methods  of  Estimating  Ex- 
penditures; Value  of  Placing  Responsibility  in  the  Exec- 
utive. 

VIII.  Contents  of  the  [French]   Budget     ....     199 
General  Budget  and  the  Annexed  Budgets;  Text  of  the 
Fiscal   Bill;   Precedence  of  Expenditures  Over  Revenues 

in  the  General  Budget;  Details  of  Expenditures  Entered 
in  the  Ordinary  Budget;  Details  of  Revenues  Entered  in 
^-- —    the  General  Budget;  Annexed  Budgets. 

IX.  Contents  of  the  [French]  Budget  {Continued)     .        .    223 
Special  Provisions;  Character  of  Items  Included;  Means 

of  Operation  and  Annual  Provisions;  Annexed  Docu- 
ments. 

X.  Extraordinary   Budgets  and   Budgets   of   Special   Re- 

sources      235 

History  of  Extraordinary  Budgets  in  France;  Discussion 
of  Merits  of  Extraordinary  Budgets;  Unjustifiable  Ex- 
penditures Authorized;  Extraordinary  Budgets  Abroad; 
Budget  of  Special  Resources. 

XI.  The  Treasury — Its   Special  Features  as  Related  to 

Budgets 267 

Special  Features  of  the  Treasury;  Relation  of  Treasury 
to  Budgets;  The  Floating  Debt,  Two  Divisions  of;  Guar- 
antees of  Interest  to  Railroad  Companies. 


PART  II 
VOTING   THE   BUDGET 

XII.    Legislative  Commissions  on  Budget — Public  Discus- 
sion   279 

French  Method  of  Voting  the  Budget;  Legislative  Com- 
missions; The  Permanency  of  Legislative  Commission; 
Reports  Prepared  by  the  Legislative  Commissions ;  Dis- 
cussions on  the  Fiscal  Law. 

xxiv 


CONTENTS 


PAGE 


XIII.  Specialization   [Special  Funding  of  Different  Ac- 

tivities] ;  THE  Result  of  Voting  by  Chapter    .        .    295 

Voting  by  Chapter;  Tendency  Toward  Specialization; 
Definition  of  the  Chapter;  Final  Voting  of  the  Budget. 

XIV.  The  Budgetary  Powers  of  the  Two  Chambers    .        .    306 

Two  Branches  of  the  Legislature;  Supremacy  of  the 
Lower  House;  Conflicts  Over  Initiative;  Budgetary  Pow- 
ers of  the  Two  Chambers  in  France;  Voting  the  Budget 
by  the  Senate. 

XV.  Annual  Voting  of  the  Budgets 319 

Annual  Budgets;  Some  Exceptions;  Sections  of  the  Budg- 
ets Voted  for  Several  Years;  Dousiemes  Provisoires; 
Votes  on  Account  in  Belgium;  English  System  in  Detail. 

XVI.  Additional      Appropriations.        Measures      Taken 

Against  Them.    Corrective  Budget.    Transfers.    .    336 

Additional  Appropriations;  Measures  to  Curb  Additional 
Appropriations;  Corrective  Budgets;  Transfers  of  Appro- 
priations. 

XVII.  Additional  Appropriations  .        .        .        .        .        .    350 

Legislature  Holds  Power;  Legislation  on  Additional  Ap- 
propriations; Annulments  of  Appropriations;  Results  of 
the  Regulation  of  Additional  Appropriations;  Additional 
Appropriations  in  Foreign  Countries. 

XVIII.  Refusal  to  Vote  the  Budget     .        .        .        .        .    381 

Consequences  of  Refusal  to  Vote;  Attempts  at  Refusing 
to  Vote  the  Budget;  Attempts  at  Refusing  to  Vote  the 
Budget  in  France. 


PART  III 
EXECUTION  OF  THE  BUDGET 

XIX.  The  Collection  of  Revenues 391 

Collection  of  Revenues  Authorized  by  Fiscal  Law;  Prep- 
aration of  the  Rolls;  The  Hierarchy;  The  Comptrollers; 
Collection  of  Direct  Taxes;  Jurisdiction  of  the  Collectors; 
Forms  of  Notices;  Close  of  the  Fiscal  Period. 

XX.  The  Collection  of  Revenues  {Continued)     .        .        .    406 

Collection  of  Indirect  Taxes;  Droites  au  Comptant; 
Monopolies  of  the  State ;  Tobacco  and  Powder ;  Droites 
Constates;  Inspectors  and  Directors. 

XXV 


CONTENTS 

CHAPTER  PACK 

XXI.  The  Collection  of  Revenues  (Continued)    .        .        .    423 

Collection  of  Customs  Duties;  Administrative  Division  of 
Registrations  and  Stamps;  Functions  of  the  Collector; 
Distinctively  Characteristic  Features  of  Services  for  the 
Collection  of  Indirect  and  Direct  Taxes;  General  Inspec- 
tion of  Finances;  Inspection  Hierarchy. 

XXII.  The  Concentration  of  Revenues  in  the  Treasury  .    445 

Collection  of  Funds;  Details  of  Making  Collections;  Con- 
centration of  Funds  by  the  Treasurers  General;  Uses  of 
the  Funds  of  the  Treasury;  Role  of  the  Bank  of  France. 

XXIII.  The  Treasury  Service 454 

The  Treasurers  General;  Their  Duties;  The  Institution 
of  the  Treasurers  General;  Outline  of  the  History  of 
French  Finances;  Napoleon  Frees  the  Treasury;  The 
Floating  Debt;  Reform  of  the  Office  of  the  Treasurers 
General;  Modified  Plan  for  Salaries;  Treasury  in  Eng- 
land, in  Germany  and  in  Belgium. 

XXIV.  Making  Disbursements   in  Accordance  With  Ap- 
propriations      475 

The  Functions  of  the  Ministry  of  Finance;  The  Services 
of  the  Ordonnateurs;  Check  on  Ministerial  Accounts; 
How  Accounts  Are  Liquidated;  Central  Accounting; 
Monthly  Estimates  of  Expenditures  Required;  Functions 
of  Accountable  Officers;  Supremacy  of  the  Minister  of 
Finance;  Disbursing  Agents  Verify  the  Documents;  Re- 
sponsibility of  the  Paymasters;  The  Right  of  Requisition; 
Penalties  for  Violations. 

XXV.  Means  of  Control  Over  Disbursements     .        .        .    495 

History  of  the  Exceeding  of  Appropriations ;  Plans  of  Re- 
form the  Order  of  the  Day;  Ministerial  Responsibility; 
The  Commission  on  the  Budget;  Organization  of  the 
Services  of  Disbursements  and  of  Control;  Disbursements 
in  England ;  In  Belgium,  the  Coiirs  des  Comptes  Is  in  Con- 
trol; a  Comparison  of  Systems  of  Control;  The  Superior- 
ity of  the  Preventive  Control. 

XXVI.  The  Closing  oy  Fiscal  Periods 517 

Fiscal  Periods  Open  Indefinitely,  Prior  to  1822;  Measures 
to  Clarify  Financial  Situation;  Closing  of  the  Fiscal 
Periods;  How  Expenditures  Are  Disbursed  Without  Ap- 
propriations; Mechanism  of  the  Accounting  for  Closed 
Fiscal  Periods;  The  Law  of  Regulation  and  Approval; 
Supplementary  Appropriations;  Quinquennial  Forfeitures; 
Law  of  January  29,  1831 ;  Fiscal  Periods  Are  Ended;  Clos- 
ing of  the  Budget  in  England;  Accounts  of  Balances  in 
Italy;  Carrying  Forward  Appropriations  from  One  Fiscal 
Period  to  the  Next. 

xxvi 


CONTENTS 

PART  IV 
CONTROL  OF   THE   BUDGET 

CHAPTER  PAGE 

XXVII.  Necessity  of  Control .535 

Revolution  Due  to  Lack  of  Control;  The  Rule  of  the 
Financiers;  End  of  the  Tax  Farmers;  Ordonnateurs  and 
Accountable  Officers;  Three  Classes  of  Control;  Admin- 
istrative Control  Over  the  Ordonnateurs;  Administrative 
Control  Over  the  Accountable  Officers ;  Double  Entry  Ac- 
counting; Possibility  of  Fraud;  Some  Illustrations;  Judi- 
cial Control  Over  the  Ordonnateurs;  Judicial  Control  Over 
Accountable  Officers. 

XXVIII.  COUR    DES     COMPTES 55^ 

The  Old  Chamber  of  Accounts;  Grave  Abuses  Arose; 
Bureau  of  Accounting;  Cour  des  Comptes;  Personnel  of 
Cour  des  Comptes;  Jurisdiction  Extended. 

XXIX.  Control  Over  the  Ordonnateurs      .        .        .        .5^5 

The  Ordonnateurs  Escape  Control;  Accounts  of  Minis- 
ters; A  Definite  Statement  of  Revenues;  General  State- 
ment of  Finances;  Commission  for  the  Verification  of  the 
Accounts  of  the  Ministers;  General  Reports  of  the  Cour 
des  Comptes;  Annual  Report  of  the  Cour  des  Comptes;  Its 
Purpose;  Cour  des  Comptes  or  Analogous  Institutions  in 
Other  Countries. 

XXX.  Regulation  of  the  Budget 586 

Definite  Regulation  of  the  Budget;  Parliamentary  Pro- 
cedure; Budget  Plans  Debated;  Regulations  of  Accounts 
in  England. 

XXXI.  Resume  of  Budgetary  Formalities    ....    601 

How  the  Budget  Is  Prepared ;  Budgetary  Formalities ;  The 
Budget  Is  Justified. 

Index      . 607 


xxvu 


THE  BUDGET 

INTRODUCTION 


CHAPTER  I 
ORIGIN  AND  DEVELOPMENT  OF  THE  BUDGET 

Definition  of  the  Word  "Budget" :  French  Legal  Definition ;  In  Part 
Unintelligible;  Difficulties  of  Satisfactorily  Defining  Term;  The 
Nouveau  Dictionnaire  de  Veconomie  politique;  Attempts  Made 
by  Various  Writers ;  A  Reconstructed  Definition ;  English  Origin  of 
Term;  Adoption  of  Term  in  France. 

Development  of  the  Budget  Prerogative  or  Right  to  Control  the 
Purse:  Not  Inherent  in  the  People  or  Their  Representatives;  An 
Attribute  of  Sovereignty;  Its  Exercise  Under  an  Arbitrary  Gov- 
ernment; Property  and  Taxes  a  Mere  Incident;  The  Right  to  Vote 
Controls;  Control  Over  the  Purse  Established  at  Great  Sacrifice. 

Origin  of  the  Right  to  Control  the  Purse  in  England:  Superiority 
of  Financial  Management  Developed;  The  Right  of  the  Nation 
to  Control  Early  Established;  All  Parties  Agreed  to  the  Repre- 
sentative Principle;  Attempts  of  the  Stuarts  to  Deny  the  Repre- 
sentative Principle;  Assertions  of  Divine  Right  by  James  I;  At- 
tempt of  Charles  I  to  Obtain  Money  by  Loans;  Procedure  Govern- 
ing Votes  on  the  Budget  Established ;  Resentment  of  Charles  I ;  An 
Attempt  at  Forced  Loans;  The  Nation  Aroused;  Subservience  of 
Charles'  Advisers;  The  Petition  of  Rights — A  Second  Charter; 
Charles'  Assertion  of  Absolute  Power;  Levy  of  "Ship  Money"; 
Trial  of  Hampden ;  Eleven  Years  Without  a  Parliament ;  The  Long 
Parliament;  The  Revolution,  1642-1649;  The  Arbitrary  Attitude  of 
Charles  II;  The  Principle  Involved;  Suspension  of  Payments — 
State  Bankruptcy ;  Defiant  Attitude  of  James  II ;  Accession  of  Wil- 
liam and  Mary;  The  Constitutional  Principles  Established;  The 
Right  of  Representatives  to  Control  Never  Again  Contested  in 
England. 

Origin  of  the  Right  to  Control  the  Public  Purse  in  the  United 
States:  Denial  of  Right  of  Representative  Control  to  Colonies; 
Protest  of  Patrick  Henry;  Duties  Fixed  on  Imports  Without  Con- 
sent;  Protests  in  England;  The  Blacklisting  of  English  Goods; 


''U^'       V.  ;;,..  THE  BUDGET 

Insurreftimi&^the  Boston  Tea  Party;  The  American  Revolution; 
Amevickn'  Independence.       • 
Establishing   the   Right   to   Control   the   Purse    in    Prussia:    Recog- 
nition of  Representative  Control  in  1850;  Violation  of  Principle; 
Attempted  Justification  by  Bismarck;  Admissions  by  William  I. 


French 
Legal  ^ 
Definition 


Definition  of  the  Word  "Budget'* 

The  public  accounting  law  gives  the  following  definition  of 
the  word  "budget" : 

"The  budget  is  a  document  which  forecasts  and  au- 
thorizes the  annual  receipts  and  expenditures  of  the  State 
and  of  the  other  branches  of  service  which  by  virtue  of 
the  laws  are  subject  to  the  same  rules  and  regulations.*' 
(Art.  5  of  the  Decree  on  Regulations  of  May  31,  1862.) 


In  Part 
Unintelli- 
gible 


Difficulties 
of    Satisfac- 
torily Defin- 
ing Term 


It  seems  necessary  to  revise  somewhat  this  legal  declara- 
tion. Its  very  last  phrase  for  example  is  scarcely  intelligible: 
Which  by  virtue  of  the  laws  are  subject  to  the  same  rules. 
To  what  same  rules  and  regulations?  There  is  no  explana- 
tion. At  best  we  can  only  guess  what  is  meant,  and  even 
then  the  guess  is  probably  wrong.  As  a  matter  of  fact, 
there  are  no  branches  of  service  subject  to  the  same  rules  and 
regulations  as  the  budget  of  the  State.  The  provinces,  mu- 
nicipalities, hospitals,  and  the  colonies  each  have  their  own 
rules.  Even  the  decree  quoted  does  not  ignore  this  fact  and, 
in  truth,  lays  down  these  special  rules  and  regulations. 

We  must  realize  at  once  the  difficulties  in  finding  a  good 
definition  of  the  word,  particularly  when  we  are  compelled  to 
make  use  of  it;  this  difficulty  is  emphasized  through  the  fail- 
ure of  sources  less  official  than  the  decree  of  May  31,  1862,  to 
improve  on  the  one  contained  in  that  instrument. 

The  Marquis  d'Audiffret  also  failed  to  give  anywhere  in 
the  six  volumes  of  his  Systeme  financier  de  la  France  the 
definition  we  seek,  although  a  part  of  his  book  bears  the  title, 
"The  Budget." 

M.  Joseph  Garnier  in  his  Traite  de  finances  follows  the 
example  of  prudent  silence  set  by  the  Marquis  d'AudiflFret. 

There  is  an  important  article  written  by  Paul  Boiteau  in 
the  Dictionnaire  des  finances  which,  notwithstanding  its  gen- 
eral title  "The  Budget"  and  its  specialized  sub-title  "Defini- 
tions," fails  to  give  any  definition  of  the  budget. 


DEFINITION  OF  THE  WORD  "BUDGET" 

The  old  Dictionnaire  de  Vecononvie  politique  says  that  "the 
budget  is  the  official  statement  of  public  receipts  and  ex- 
penditures"; but  since  the  budget  and  the  statement  are  two 
distinctly  different  things,  these  two  terms  cannot  be  used  to 
define  each  other. 

The  Nouveau  Dictionnaire  de  Veconomie  politique  could 
not  well  commit  the  same  error.  Dubois  de  TEstang  defined 
the  budget  [in  terms  of  purpose]  as  follows: 

"The    purpose    of    the    budget    is    to    determine    the  Attempts 
amounts  which  individuals  have  to  contribute  jointly  to  ^^fo^g^ 
cover  expenditures  for  a  public  use,  and  to  regulate  with  Writers 
sovereign  authority  the  use  to  be  made  of  the  funds  thus 
obtained."  ^ 

Jean-Baptiste  Say  defined  the  budget  as  "a  balance  between 
the  needs  and  the  resources  of  the  State." 

The  Dictionnaire  de  I' Academic  frangaise  gives  the  fol- 
lowing definition  of  the  term  "budget"  as  "a  word  of  English 
origin,  used  in  public  administration  to  express  the  annual 
estimates  of  expenditures  which  are  intended  to  be  made,  and 
of  funds  or  revenues  appropriated  to  meet  these  expendi- 
tures." 

Littre's  Dictionary  defines  the  budget  as:  "A  statement 
made  annually  containing  public  revenues  and  expenditures," 
and  he  supports  his  definition  by  fantastic  quotations  from 
Victor  Hugo  and  Barthelemy: 

"The    budget,    strange    fish    and    monster    vast 
To  which  from  all  sides  the  hook  is  cast."     (Hugo) 

"Annual  budget,  leech  aspiring 
That  sucks  what  the  people  sweat  in  acquiring." 

(Barthelemy) 

These  are  metaphors  which  are  quite  aside  from  technical 
considerations. 

The  seventh  edition  of  Paul  Leroy-Beaulieu's  Traite  de  la 
science  des  finances  contains  the  following : 

"The  budget  is  in  the  first  place  a  statement  forecast- 
ing revenues  and  expenditures  during  a  certain  deter- 

^  We  shall  comment  later  on  this  definition. 

3 


THE  BUDGET 


A  Recon- 
structed 
Definition 


English 
Origin  of 
Term 


mined  period  of  time.  ...  It  is  also  an  authorization  or 
an  order  by  competent  authorities  to  make  the  expendi- 
tures and  collect  the  revenues  [designated]   .  .  ." 

Thus  it  becomes  possible  to  construct  an  acceptable  defi- 
nition, bearing  in  mind  that  certain  dangers  are  still  to  be 
avoided.  For  example,  instead  of  discussing  budgets  in  gen- 
eral, we  do  well  to  confine  ourselves  to  the  budget  of  the  State 
so  as  to  make  the  idea  more  clear  and  precise.  We  would  do 
well  also  to  consider  a  budget  a  matter  of  statutory  law  and 
not  simply  a  statistical  table  or  estimate.  The  lump  budgets 
of  the  Direct oire  or  of  the  Consulat,  for  instance,  were  passed 
with  very  few  or  no  estimates  or  tables.  Our  definition, 
therefore,  should  convey  the  idea  that  the  budget  is  an  im- 
portant and  authentic  document. 

[Reconstructing  our  definition]  :  Let  us  substitute  for  the 
words  "which  forecasts,"  used  in  the  decree  of  May  31,  1862, 
the  phrase  ''approved  financial  plan,"  because  the  act  of 
estimating  revenues  and  expenditures  would  convey  the  idea 
only  of  a  tentative  proposal.  On  the  contrary,  an  approved 
plan  or  project  not  only  anticipates  the  future  requirements 
for  expenditure,  but  also  undertakes  to  show  how  they  may 
be  met.  The  decree  of  May  31,  1862,  does  not  fail  to  add 
the  idea  of  authorization  or  approval  to  the  idea  of  an  esti- 
mate or  forecast  of  conditions.  The  notion  of  a  forecast, 
however,  which  distinguishes  budgets  from  statements  [of 
account]  must  be  preserved  very  carefully.  Let  us  also 
elminate  from  our  definition  the  word  annual  which  is 
used  in  the  decree  of  May  31,  1862,  because  certain  coun- 
tries have  budgets  which  are  voted  for  a  number  of  years. 
After  having  made  all  these  corrections,  let  us  go  back  to 
the  definition  in  the  decree  and  amend  it  as  follows : 

'The  budget  of  the  State  is  a  document  containing  a 
preliminary  approved  plan  of  public  revenues  and  expen- 
ditures." 

-i  The  philological  origin  of  the  word  "budget"  is  English: 
hongctte,  pochette,  sac,  etc. — meaning  pouch,  pocket,  sack. 
All  treatises  on  the  subject  give  this  as  its  origin.  [Com- 
menting on  this  derivation]  J.  B.  Say  says:  "The  common 
use  of  a  formal  term  brings  with  it  the  necessity  of  expressing 
it  briefly."     As  soon,  therefore,  as  the  idea  of  the  budget 

4 


DEFINITION  OF  THE  WORD  "BUDGET" 

became  popular,  it  became  necessary  to  find  a  short  and  sim- 
ple word  to  express  it,  and  it  is  not  surprising  that  England 
was  the  country  to  invent  the  term. 

France,  on  the  contrary,  until  the  end  of  the  ancien  regime 
was  able  to  go  without  an  everyday  term  which  would  express 
what  was  meant.  It  would  be  hazardous,  perhaps,  to  main- 
tain that  the  three  volumes  on  the  Administration  des 
finances,  by  Necker,  published  in  1784,  do  not  contain  the 
word  "budget"  at  all;  but,  at  any  rate,  it  is  hard  to  find. 
Minute  researches  made  in  a  later  book,  Finances  de  la 
France,  by  Ramel,  former  Minister  of  Finance,  published  Adoption 
in  the  year  IX  of  the  French  Republic,  do  not  reveal  that  "„  Fr^'nce 
the  word  was  used  once.  In  the  year  XI  of  the  French  Re- 
public a  report  to  the  Trihunat,  according  to  J.  B.  Say,  con- 
tains the  following  statement:  "Budget,  a  barbarian  word, 
even  in  England,  where  it  has  lost  its  original  meaning,  and 
which  we  would  replace  justly  by  calling  the  thing  by  its  real 
name,  i.  e.,  a  balance  between  the  needs  and  the  resources  of 
the  State/'  Public  documents  began  to  use  the  word  "budget" 
only  a  few  years  after  the  beginning  of  the  nineteenth  cen-  J 
tury. 

Development  of  the  Budget  Prerogative,  or  Right  to 
Control  the  Purse 

The  foregoing  discussion  suggests  the  important  part  that 
budgets  have  played  in  the  history  of  all  countries.  As  a 
matter  of  fact,  there  are  few  rights  or  political  principles  of 
greater  importance  to  a  nation  than  those  of  determining  what 
public  revenues  shall  be  raised,  and  what  expenditures  shall 
l)e  authorized.  What  violent  struggles  ensued  in  acquiring 
that  right  in  England,  in  the  United  States,  in  Germany,  in 
France!  What  public  authority  shall  exercise  that  right  and 
what  are  the  necessary  formalities  to  protect  and  confirm  its 
possession?  Without  an  introductory  statement  it  would  be 
difficult  to  understand  the  reason  for  the  great  importance  at- 
tached to  the  regulations  discussed  in  the  pages  which  follow. 

The  principle  that  "the  representatives  of  a  nation  must 
vote  the  public  revenues  and  expenditures"  has  l^ecome  so  Not  Inher- 
firmly  established  in  our  day  that  one  is  easily  led  to  believe  ^^  ^"  *^^ 
that   this   right  or  principle  has  always   existed.      History,  xhSr^Rep- 
however,  shows  the  great  difficulties  encountered  in  the  de-  resentatives 
velopment  of  this  principle.     Let  us  consider  its  justification. 


THE  BUDGET 

Why  should  a  people  have  the  right  to  authorize  the  reve- 
An  ^  nues  and  expenditures  of  the  State  through  their  representa- 

Wrefgnty  ^^^^^  ^  ^^  ^^  because  they  must  bear  the  burden  of  public 
expenditure?  It  would  seem  logical  to  answer  "that  those  who 
contribute  have  the  right  to  approve  the  tax,  because  they 
are  the  ones  to  pay  it."  This,  however,  would  be  a  thought- 
less answer  because  the  obligation  to  pay  does  not  carry 
with  it  the  right  to  regulate  the  amount  of  one's  debt,  even  in 
budget-making.  Does  a  vanquished  people  under  the  rule  of 
an  alien  master  retain  the  right  to  determine  the  amount  of 
taxes  to  be  paid  by  them?  When  Napoleon,  after  the  Battle 
of  Jena,  in  1806- 1807,  administered  Hesse,  Westphalia, 
Hanover  and  Prussia,  through  General  Clarke  and  Count 
Daru,  and  when  he  levied  in  that  territory  the  usual  and  the 
extra  taxes,  did  the  German  taxpayers  under  the  yoke  of  the 
conqueror  presume  to  argue  about  the  principle  of  claiming 
for  themselves  the  right  to  determine  the  amount  and  the  use 
of  taxes  taken  from  their  own  pockets?  By  no  means.  The 
sovereign  rights  rested  with  Napoleon,  and  therefore  the 
Emperor  dictated  the  taxes  solely  on  the  basis  of  his  own 
authority. 
f  The  constitutional  right  which  a  nation  possesses  to  au- 
thorize public  revenues  and  expenditures  does  not  originate 
from  the  fact  that  the  members  of  the  nation  contribute  the 
^ -^payments.  This  right  is  based  on  a  loftier  idea:  the  idea  of 
sovereignty.  It  is  only  when  sovereignty  rests  with  a  nation 
[as  distinguished  from  a  king  or  ruling  class]  that  the  peo- 
ple acquire  the  right  to  authorize  public  revenues  and  expendi- 
tures [either  directly  or  through  their  representatives].  In 
case  a  nation  were  not  sovereign,  it  would  have  to  pay,  as 
did  Prussia  under  Napoleon;  it  would  not  possess  the  right 
to  control  the  public  purse — the  "budget  prerogative"  would 
be  unknown. 
Its  Exercise  Let  US  put  aside  the  rather  brutal  idea  of  military  con- 
a"i?-!!o^°       quest  and  substitute   for  it  either  an   aristocratic   form  of 

Arbitrary  ^  1       <      •  t         1  1        1      < 

Government  government  or  an  absolutism.  In  these  cases  the  budgets 
would  be  regulated  by  virtue  of  an  established  constitution, 
either  by  assemblies  of  the  nobility  or  by  the  king  himself. 
This  means  that  in  the  last  instance  the  budget  would  be 
regulated  by  those  in  whom  the  sovereignty  was  vested — in 
other  words,  those  who  exercise  the  legal  right  of  ultimate 
control.  Under  such  circumstances  the  people  [and  their 
1  chosen  representatives]  would  have  no  voice  in  determining 
^  6 


DEFINITION  OF  THE  WORD  "BUDGET" 

the  amount  or  the  use  to  be  made  of  the  taxes  which  they 
would  have  to  pay. 

Thus  Bossuet  could  state  in  his  Instructions  d  Monsei- 
gneitr  le  Dauphin  that  the  authority  of  the  king  had  three 
main  characteristics,  viz. :  that  this  authority  is  sacred,  pa- 
ternal and  absolute.  "As  soon  as  there  is  a  king,  the  people 
must  behave  quietly  under  his  authority.''  This  famous  bishop 
deduced  from  these  premises  the  following  necessary  con- 
clusions :  "The  king  has  exclusively  the  right  to  levy  taxes ; 
and  the  only  restriction  on  him  is  [his  obligation  to  the 
people]   to  exercise  this  right  with  moderation." 

As  has  been  written,  the  people  must  "render  therefore 
unto  Caesar  the  things  which  are  Caesar's."  ^  The  right  to 
determine  what  the  taxes  and  public  expenditures  shall  be  Property 
does  not  result  from  mere  fact  of  payment,  nor  is  the  right  and  Taxes 
to  control  the  purse  proportionate  to  the  amount  of  taxes  incident 
paid;  it  is  proportionate  to  the  power  that  each  and  every 
individual  possesses  to  exercise  ultimate  control.  There  can 
be  no  doubt  that  under  constitutions  where  electoral  quali- 
fications exclude  whole  classes  of  people  who  pay  taxes  be- 
low a  certain  limit,  a  definite  relation  is  established  between 
the  vote  and  the  amount  of  taxes  paid.  This  is  also  the 
case  in  countries  where  a  plural  vote  is  provided  for.  In  such 
case  the  individual's  property  is  one  of  the  elements  serving 
to  determine  the  portion  of  his  sovereignty.  Where  universal 
suffrage  is  in  force,  which  means  that  wherever  a  citizen 
of  mature  years — no  matter  what  the  amount  of  his  property 
or  even  if  he  has  no  property  at  all — possesses  an  equal  por- 
tion of  sovereignty,  all  relation  between  the  vote  and  the 
payment  of  taxes  is  eliminated.  The  citizen  who  pays  heavy 
taxes  to  the  State,  as  well  as  the  citizen  who  pays  small  taxes 
or  no  taxes  at  all  has  an  equal  voice  in  the  exercise  of  the 
control  over  the  purse.  It  is  sufficient  to  be  a  voter  in  order 
to  exercise  one's  share  of  influence  upon  the  financial  policy 
of  the  country.    This  share  is  uniform,  because  [the  electorate 

^  About  the  same  time  Fenelon  entertained  much  more  nearly  cor- 
rect ideas.  We  quote  hereinafter  L'examen  de  conscience  sur  les 
devoirs  de  la  royaute,  in  which  he  says  to  the  duke  of  Bourgogne: 
"You  know  that  in  former  times  the  king  never  took  anything  away 
from  the  people  on  his  own  authority."  The  parlement,  that  is  the 
Assembly  of  the  nation,  granted  funds  to  the  king.  What  if  the 
absolute  authority  the  kings  have  acquired  should  change  this  order 
of  things?  ,    ' 

7 


THE  BUDGET 

are  in  ultimate  control  and]   the  privilege  of  voting  obtains 
without  any  condition  whatever  based  on  possession  of  prop- 
erty or  payment  of  taxes. 
The  Right  What  is  more,  the  pauper — who  not  only  does  not  pay  taxes 

Control  ^^^^  ^^^  ^^  ^^^  ^y  ^^^  State,  is  sheltered,  maintained,  taken  care 

of  or  supported  in  hospitals  or  asylums  through  the  medium  of 
charitable  institutions — retains  his  budget  prerogative  in  its 
entirety,  he  cooperates  in  proportion  to  his  vote  in  the  making 
of  the  budget,  although  his  personal  interest  is  concerned  only 
with  the  expenditure.  In  other  words,  his  interests  are  quite 
opposed  to  the  interests  of  tax  contributors. 

These  anomalies  give  rise  to  many  fears  which  we  shall 
ignore  because  they  are  not  directly  connected  with  our  sub- 
ject. Let  us  end  this  discussion,  therefore,  with  the  con- 
clusion that :  "Every  member  of  society  or  of  a  nation  exer- 
cises a  share  of  control  over  the  purse  or  the  budget  pre- 
rogative, corresponding  to  the  share  of  sovereignty  [or  the 
legal  right  of  ultimate  control]  vested  in  him."  ^ 

Since  the  budget  prerogative  is  an  attribute  of  the  legal 
right  of  ultimate  control  or  sovereignty,  the  securing  of  this 
right  just  as  the  securing  of  any  degree  of  political  control 
comes  only  after  violent  struggle.    Acceptance  of  the  formula 

*The  idea  of  considering  the  right  to  approve  public  revenues  and 
expenditures  as  an  attribute  of  sovereignty  was  considered  by  M. 
Leon  Say  to  be  subject  to  criticism.  In  the  Journal  des  Debats  of 
February  27,  1890,  this  noted  writer  expressed  himself  as  follows: 
"M.  Stourm  considers  the  budget  prerogative  [the  right  to  control 
the  purse]  a  kind  of  royal  prerogative.  It  has  its  origin  in  the  idea 
of  sovereignty  and  is  a  result  of  the  prerogative  to  rule.  If  the 
budget  prerogative  is  an  attribute  of  sovereignty,  then  the  purpose 
of  the  struggle  for  power  is  to  make  one  part  of  the  people  pay 
taxes  for  the  benefit  of  the  other  part.  .  .  .  The  last  word  [in  ex- 
tension] of  this  theory — a  word  far  from  the  idea  expressed  by  M. 
Stourm — has  been  enunciated  by  President  Jackson  of  the  United 
States,  who  said:  To  the  victors  belong  the  spoils'  .  .  .  one  with 
plenty  of  money  in  hand,  with  his  servants  and  his  (friends)  forms 
a  privileged  class.  .  .  .  Justice  then  is  but  an  empty  word  or  a  word 
the  meaning  of  which  has  undergone  a  change." 

The  real  definition  of  budget,  according  to  M.  Leon  Say,  was  given 
in  the  Nouveau  Dictionnaire  d'economie  politique,  a  quotation  from 
which  was  given  above.  According  to  this,  the  budget  is  a  contract 
between  constituents  who  are  the  contributors,  and  agents,  who  are 
the  persons  in  power.  "The  budget  is  an  order  given  by  the  nation 
to  its  agents  to  dispose  of  public  funds  within  limits  and  under  con- 
ditions fixed  in  advance."  The  consequence  of  looking  at  the  budget 
in  this  way,  is — "that  in  countries  with  defective  constitutional  gov- 

8 


DEFINITION  OF  THE  WORD  "BUDGET'^ 

that:     'The  right  of  control  over  public  revenues  and  ex- 
penditures rests  with  the  representatives  of  the  nation"  had 
to  undergo  the  test  of  the  most  terrible  revolutions  before  it  Control  over 
found  a  permanent  place  in  our  constitutions.     The  history  Es^tablistTed 
of  these  revolutions  shows  the  importance  of  financial  ques-   at  Great 
tions  in  the  life  of  a  nation;  it  also  shows  the  importance  Sacrifice 
of  a  special  study  of  this  subject.     Besides,  history  shows  the 
real  significance  of  budgetary  formalities  and  of  rights  of 
control  protected  by  them,  which  often  appear  trifling  when 
contrasted  with  the  sacrifices  made  to  establish  them. 

Origin  of  the  Right  to  Control  the  Purse  in  England 

England  has  outdistanced  other  nations  in  the  matter  of  S"P5"or»!y 
financial  management.  In  the  fifteenth  century  Commines  Manage^'^ 
wrote  as  follows:     "In  my  judgment,  from  all  the  states  of  ment 

; ; Developed 

ernments,  there  is  no  budget  in  the  practical  or  philosophical  sense 
of  the  term." 

In  spite  of  the  high  authority  of  the  lamented  M.  Leon  Say,  I  am 
inclined  to  uphold  my  own  definition :  The  budget  is  but  "a  document 
containing  the  preliminary  approval  of  public  revenues  and  ex- 
penditures." 

Nothing  need  be  added  to  this  definition,  because,  going  beyond 
that,  we  shall  have  to  distinguish  between  countries  which  have  a 
legislative  body  and  those  which  have  not;  and  to  declare,  for  in- 
stance, that  Russia  never  had  a  budget  prior  to  the  assembly  of  the 
Duma.  What  then  shall  we  call  the  estimates  of  future  revenues 
and  expenditures  which  were  sanctioned  each  year  by  the  Tzar 
in  a  very  methodical  way,  and  which,  after  all,  were  the  budgets  of 
the  Russian  Empire?  Even  in  countries  possessing  a  parliamentary 
form  of  government,  the  budget,  as  defined  above,  would  not  exist  at 
all,  if  the  executive  power  were  not  sufficiently  separated  from  the 
legislative  power,  and  those  in  authority  (mandataires)  could  not  be 
distinguished  from  the  constituents  (mandants).  A  [Revolutionary] 
convention,  for  instance,  absorbing  in  itself  all  power  would  become, 
as  Russia,  incapable  of  preparing  a  budget,  because  no  authority  would  ^ 
be  competent  to  enter  into  a  sacrosanct  contract  with  it. 

In  our  opinion,  definitions  should  possess  qualities  of  universal 
application.  The  word  to  be  defined  should  be  taken  in  its  most 
general  sense,  with  no  interpretative  restrictions.  When  defining 
budgets,  it  is  not  a  question  of  distinguishing  between  good  and  bad 
budgets.  This  would  be  preposterous.  It  is  sufficient  to  say  that  it  is 
a  budget.  Later  on,  when  criticizing  irregular  budgets,  and  reserving 
our  sympathies  for  those  which  are  regular,  we  shall  agree  with  M. 
Leon  Say,  as  is  proper,  and  we  shall  be  able  to  declare  with  him,  and 
without  hesitation,  that  only  those  countries  which  have  constitu- 
tional forms  of  government  are  competent  to  make  regular  budgets. 
This,  the  present  book  will  show  on  every  page. 

9 


/ 


THE  BUDGET 


V 


The  Right 
of  the 
Nation  to 
Control 
Early 
Established 


All  Parties 
Agreed  to 
the  Repre- 
sentative 
Principles 


Attempts  of 
the  Stuarts 
to  Deny  the 
Representa- 
tive 
Principle 


the  world  of  which  I  have  knowledge,  England  is  the  country 
in  which  public  affairs  are  best  administered."  Thus  at  the 
time  of  the  Second  Revolution  which  brought  William  of 
Orange  to  the  throne,  that  is  since  1688,  we  find  the  budg- 
etary system  of  England  almost  perfectly  established. 

During  a  considerable  period  before,  however,  England 
adhered  to  the  rule  that  "Every  tax  shall  be  approved  by 
representatives  of  the  people."  This  right  to  control  the 
public  purse  or  budget  prerogative  was  written  in  England's 
oldest  charters.  Macaulay  says  that  'this  right  is  so  ancient 
that  none  can  say  when  it  began  to  exist.  It  was  established 
as  a  principle  that  the  King  could  not  legislate  without  the 
consent  of  his  Parliament.'  Macaulay  adds,  however,  'that 
there  is  no  single  document  in  which  these  great  principles 
can  be  found;  that  they  are  scattered  over  English  statutes; 
and,  what  is  still  more  important,  they  have  been  for  the  last 
four  hundred  years  engraved  in  the  hearts  of  all  Englishmen. 
Whigs  and  Tories  alike  agreed  on  the  subject  that  the  funda- 
mental laws  of  the  kingdom  were  opposed  to  the  sovereign's 
publishing  a  law  or  imposing  a  tax,  or  maintaining  the  smallest 
regular  army  without  the  consent  of  the  representatives  of 
the  nation.'  ^ 

These  precedents,  four  centuries  old,  rendered  the  more 
grave  and  terrible  in  their  consequences  the  plans  for  control 
inaugurated  by  the  Stuarts  at  the  beginning  of  the  seventeenth 
century. 

However,  inaugurated  is  not  entirely  exact,  for  before 
this  the  Tudors,  Henry  VHI  and  Elizabeth,  at  different  times 
had  violated  this  ancient  law,  but  only  temporarily  and  on 
occasion.     James  I,  on  the  contrary,   from  his  accession  to 

^  These  quotations  are  taken  from  Macaulay's  History  of  England. 
In  this  work  he  said,  among  other  things :  'That  the  King  could  not 
impose  taxes  without  the  consent  of  Parliament  is  admitted  to  have 
been,  from  time  immemorial,  a  fundamental  law  of  England.  It  was 
among  the  articles  which  John  was  compelled  by  the  Barons  to  sign. 
Edward  the  First  ventured  to  break  through  the  rule ;  but  able,  power- 
ful and  popular  as  he  was,  he  encountered  an  opposition  to  which  he 
found  it  expedient  to  yield.  He  covenanted  accordingly  in  express 
terms,  for  himself  and  his  heirs,  that  they  would  never  again  levy 
any  aid  without  the  assent  and  good-will  of  the  estates  of  the  realm.'' 

Boutmy  in  his  remarkable  work  on  England,  Etudes  de  droit  consti- 
tutionnel,  France,  Angleterre,  Rtats-Unis,  et  Developpement  de  la 
constitution  et  de  la  Societe  en  Angleterre,  with  the  same  thought 
analyzes  the  Great  Charter  of  1215,  and  the  subsequent  covenants 
made  between  the  king  and  the  nation. 

10 


DEFINITION  OF  THE  WORD  "BUDGET" 

the  throne  in   1603,  tried  to  justify  his  claims  to  absolute 
authority.     The  quality  of  being  "the  vice-gerent  of  God," 
which  he  gave  to  himself,   according  to  official  commenta-  Assertions 
tors,  put  the  king  above  the  law  and  abolished  for  the  bene-  ^i^^^i^ 
fit  of  the  king  the  ancient  rights  of  the  nation,  particularly  James  I 
those  with  regard  to  control  over  the  purse.     By  interpre- 
tation of  the  Stuarts,  the  right  to  establish  and  levy  taxes 
rested  with  the  king  alone.    The  attitude  of  James  I,  without 
causing  open  hostilities,   brought  about  a  spirit  of  distrust 
in  the  country  and  prepared  the  way  for  the  conflict  which 
broke  out  in  the  reign  of  his  son,  Charles  I.    Here  it  becomes 
necessary,  in  order  to  follow  events  more  closely,  to  study  each 
session  of  Parliament  between  1625  and  the  Revolution  of 
1648,  at  which  demands  for  subsidies  were  discussed. 

The  Commons,  which  were  convened  by  Charles  I  at  the  pf*^^^*  j^ 
time  of  his  accession  to  the  throne  in  1625,  showed  them-  ^o  oiatain 
selves  to  be  most  distrustful  and  obstinate,  and  granted  him  Money  by 
an  insufficient  subsidy.     The  King  implored  them  to  giv.e  him  ^^^"^ 
more,  pointing  out  to  them  most  humbly  his  youth,  his  needs 
and  the  debts  left  by  his  father.    As  the  Commons  proved  to 
be  unrelenting,  they  were  dissolved.     After  the  dissolution, 
Charles  I  secured  money  for  himself  by  contracting  loans;      ^ 
but  the  war  with   Spain  did   not  end  advantageously,   and 
another  Parliament  was  convened  in  1626. 

This  second  Parliament  granted  the  subsidies  which  were  Procedure 
demanded,  postponing,  however,  the  formality  of  passing  the  vot^Tn"^ 
act  until  the  last  of  the  session.    Thus,  from  1626  on,  a  pro-  the  Budget 
cedure  of  voting  on  the  financial  measures  was^haugurated  Established 
in  England,  which  has  continued  to  the  present  day.     Ac- 
cording to  this  procedure,  the  appropriation  act  passed  at 
the  end  of  the  session  of  Parliament  is  required  to  sanction  ' 
all   previous   authorizations  or  partial   appropriations. 

Charles  I,  provoked  by  this  method  of  showing  distrust  Resentment 
in  him,  began  to  utter  threats  against  the  institution  of  repre-  °  ^^  ^^ 
sentative  control.  In  his  name  it  was  said,  that  all  Chris- 
tian kingdoms  once  had  representative  [or  popular]  forms 
of  government  until  the  monarchs,  beginning  to  realize  their 
own  strength  and  the  troublesome  spirit  animating  these  as- 
semblies, gradually  substituted  royal  prerogative;  and  in  all 
Christian  kingdoms,  with  the  sole  exception  of  England,  they 
finally  abolished  parliaments. 

Such  expressions,  of  course,  did  not  suit  the  Commons, 
and  they  definitely  refused  to  grant  the  subsidies  which  were 

n 


THE  BUDGET 


An  Attempt 
at  Forced 
Loans 


The  Nation 
Aroused 


Subser- 
vience of 
Cliarles' 
Advisers 


demanded.  Various  temporary  expedients  were  used  to  re- 
plenish the  empty  royal  coffers.  Soon  after  spending  all  his  re- 
sources, however,  Charles  I  threw  off  all  restraint  and  issued 
a  decree  based  on  his  own  authority  calling  for  a  general  and 
compulsory  loan,  apportioned  to  each  citizen  according  to  the 
rate  at  which  he  had  contributed  to  the  last  subsidy.  The 
casuists  of  the  court  endeavored  to  establish  a  fine  distinction 
between  a  tax  and  a  loan;  they  argued  that  if  the  authority 
for  levying  taxes  rested  exclusively  with  the  representatives 
of  the  nation,  then  the  right  to  negotiate  loans  rested  ex- 
clusively with  the  king.  It  was  plain,  however,  that  the  com- 
pulsory loan  was,  in  fact,  nothing  less  than  a  disguised  tax; 
and  the  people  could  not  be  deceived,  in  spite  of  the  sophistic 
arguments  of  the. casuists.  Furthermore,  the  ideas  of  public 
right  and  national  sovereignty,  which  were  already  very 
strong,  at  that  time  provoked  a  general  refusal  to  obey  the 
King's  warrant  under  sign  manual  calling  for  a  compulsory 
loan.  Experience  in  France  was  quite  different,  where,  al- 
though instances  of  illegal  taxes  were  by  no  means  lacking, 
there  was  no  general  refusal  to  pay  taxes  at  any  time.  When 
the  Government  of  Charles  I  proceeded  to  make  arrests,  it 
only  made  matters  worse  because,  through  writs  and  appeals 
to  courts,  the  prisoners  stirred  up  public  hostility.  The  trial 
of  five  of  the  prisoners  at  their  own  risk  and  danger  carried 
as  far  as  the  Court  of  the  King's  Bench  aroused  the  anger  of 
the  entire  nation.  Then  came  the  rupture  with  France;  and, 
subsidies  becoming  more  necessary  than  ever,  Parliament  was 
convened  in  1628. 

At  the  opening  of  this  Parliament,  Charles  I  addressed  it 
in  a  defiant  tone.  This,  of  course,  did  not  contribute  to  his 
success.  Among  other  things,  he  said  to  the  Commons  that : 
In  case  they  did  not  do  their  duty  by  contributing  to  the 
needs  of  the  State,  he  would  feel  obliged  by  his  conscience 
to  use  other  means.  Charles  I  reasoned  the  matter  out  in 
this  way:  there  is  no  doubt  that  the  representatives  of  the 
country  have  a  right  to  approve  the  levying  of  taxes;  but 
if  these  representatives  refuse  to  furnish  necessary  subsidies, 
or  if  urgent  and  indispensable  needs  manifest  themselves,  the 
king  may  act  upon  his  own  authority  by  virtue  of  the  pre- 
rogatives of  the  Crown.  Therefore,  in  case  of  necessity, 
the  king  can  impose  taxes,  and  he  alone  has  to  judge  whether 
such  necessity  is  present  or  not.  Such  were  the  conclusions 
reached  at  a  consultation  of  compliant  judges.     The  King 

12 


DEFINITION  OF  THE  WORD  "BUDGET" 

regarded  himself  as  a  supreme  judge  entrusted  by  right  of 
birth  with  the  duty  of  providing  for  the  security  and  happi- 
ness of  his  people  and  vested  by  divine  Providence  with  dis- 
cretionary power  in  devising  the  means  for  obtaining  this 
salutary  purpose. 

David  Hume  said  that  *it  was  the  greatest  misfortune  that 
the  King  formed  for  himself  an  entirely  different  opinion 
of  the  Constitution  than  had  begun  to  prevail  among   his  The  Petition 
subjects.-      Parliament  responded  by  drafting  the  "Petition  \  Second" 
of  Rights" — the  second  charter  of  England,  which  confirmed   Charter 
and  completed  the  Magna  Charta  of  121 5.     This  "Petition 
of  Rights"  was  a  solemn  declaration  [by  Parliament]  that  no  7 
tax  whatsoever  could  be  levied  without  the  consent  of  the    \    ^ 
nation;  it  also  expressly  condemned  compulsory  as  well  as 
voluntary  loans  to  the  Crown.    Charles  I  for  a  long  time  hesi- 
tated about  signing  the  document ;  but,  being  pressed  by  need 
of  money,  he  finally  affixed  his  official  seal,  June  7,   1628. 
Thereupon,    five   subsidies   were   immediately  granted. 

In  spite  of  this  pledge,  the  Royal  Government  did  not  hesi- 
tate to  levy  poundage  and  tonnage  taxes  in  the  ports,  al- 
though the  parliamentary  authorization  for  these  taxes  had 
long  since  fallen  under  the  statute. of  limitations.  The  fourth 
Parliament  assembled  in  1629  and,  without  contesting  the 
necessity  or  the  propriety  of  the  taxes  in  question,  volun- 
teered to  authorize  them.  But  this  was  not  the  end.  There- 
upon Parliament  summoned  the  officers  of  the  customs  ad- 
ministration in  order  to  question  them  fully  as  to  their 
authority  for  seizing  merchandise  brought  in  in  violation  of 
the  poundage  and  tonnage  law.  .  Charles  I,  irritated  by  these 
investigations  showing  a  lack  of  respect,  dissolved  Parlia- 
ment in  163 1,  and  manifested  his  intention  to  rule  thence- 
forth without  its  aid. 

After  this  fourth  session  of  Parliament  began  the  decisive  Charles' 
period  in  which  the  King  deliberately  attempted  to  assume  Absdu^"" 
absolute  power,  and  to  impose  new  taxes  without  the  ap-  Power 
proval  of  the  representatives  of  the  country.     Having  re- 
solved, as  we  have  said,  not  to  convene  the  Commons  any 
more,  he  at  first  continued  to  levy  the  poundage  and  tonnage 
tax;  later  he  created  monopolies  on  soap,  leather,  salt,  etc.^ 

^  "The  following  is  an  incomplete  list  of  commodities  of  which  a 
monopoly  was  made:  Salt,  soap,  coal,  iron,  wine,  leather,  starch, 
feathers,  cards  and  dice,  felt,  laces,  tobacco,  barrels,  sour  herrings, 

13 


THE  BUDGET 


Levy  of 
"Ship- 
Money" 


Trial  of 
Hampden 


Eleven 
Years  With- 
out a 
Parliament 


Finally,  when  these  petty  measures  became  insufficient,  he 
did  not  hesitate  to  impose  by  virtue  of  his  own  authority  a 
new  tax  on  vessels — the  famous  levy  of  ship-money. 

In  former  times  the  Government  in  case  of  war  could 
summon  the  inhabitants  of  counties  to  take  up  arms  and 
organize  for  defense.  The  king  had  also  the  right  to  de- 
mand that  counties  bordering  on  the  sea  should  supply  vessels, 
and  at  times  the  Government  demanded  that  money  be  sup- 
plied instead  of  vessels.  Now  the  King  in  time  of  peace 
began  to  establish  permanently  both  in  the  interior  of  the 
country  and  on  its  shores  a  condition  which  in  former  times 
could  have  been  justified  only  by  pressing  necessity.  Macau- 
lay  says  that  the  entire  nation  became  alarmed  and  exas- 
perated. There  is  no  doubt  that  Charles  I  faithfully  em- 
ployed the  funds  resulting  from  the  ship-money  to  rebuild 
the  fleet,  but  this  did  not  make  the  tax  legal,  so  long  as  the 
people  [or  their  representatives]  did  not  approve  it. 

Hampden,  one  of  the  most  celebrated  opponents  of  the 
King,  refused  to  pay  his  assessment,  which  amounted  to  only 
twenty  shillings.  This  refusal  exposed  him  to  the  full  severity 
of  the  law,  and  for  twelve  days  the  entire  nation  followed 
with  anxiety  the  phases  of  Hampden's  trial  before  the  Cham- 
ber of  the  Exchequer.^  With  Hampden  it  was  not  a  question 
of  twenty  shillings;  it  was  the  constitutional  question  of  the 
right  to  control  the  purse — the  budget  prerogative.  With 
whom  did  the  power  to  levy  taxes  rest?  With  whom  did  the 
sovereignty  of  the  nation  rest?  This  was  the  crux  of  the 
controversy  between  the  King  and  the  nation.  Hampden  was 
convicted  as  everybody  had  foreseen ;  but  the  public  had  been 
thoroughly  aroused.  The  nation  awoke,  and  beheld  with 
terror  the  chains  which  were  about  to  be  forged  on  her. 
The  nation  was  made  to  realize,  by  what  had  occurred,  that 
not  alone  its  constitutional  right  to  control  the  purse  but  its 
political  liberties  were  jeopardized. 

From  March  i6,  1629,  until  April  16,  1640,  there  was  no 
Parliament.  Eleven  years  of  government  without  national 
representation   constituted  an   unheard-of  event   in   the  his- 


butter,  potash,  linen,  buttons,  catgut,  spectacles,  combs,  saltpetre,  gun- 
powder."— Guizot,  Histoire  de  la  revolution  d'Angleterre,  1625-1660, 
6  Vol. 

1  "Hampden  quietly  and  with  no  anger  refused  to  pay,  trying  only 
to  have  a  judgment  passed  in  his  person  on  the  rights  of  his  country." 
^—Guizot,  op.  <;it. 

14 


DEFINITION  OF  THE  WORD  "BUDGET* 

tory  of  England.  [In  France  such  interruptions  lasted  for 
centuries,  as  is  shown  in  the  next  chapter.]  During  this 
interval  of  eleven  years,  the  Government  continued  to  levy 
taxes  which  it  had  illegally  imposed.  Furthermore,  the  Gov- 
ernment mortgaged  the  crown  lands  and  negotiated  loans 
until  the  King,  finding  himself  at  the  end  of  his  resources, 
deemed  it  necessary  again  to  convene  the  Commons.  This 
he  did  in  1640. 

At  this  fifth  assembly  of  Parliament,  Charles  I  offered  to 
abolish  the  tax  on  vessels,  of  which  he  "never  intended  to 
make  a  permanent  revenue,"  and  he  pledged  his  word  as  a 
gentleman  not  to  levy  any  more  taxes  without  the  consent 
of  the  nation.  But  as  the  stern  attitude  of  the  Commons  did 
not  seem  to  respond  sufficiently  to  his  advances,  he  abruptly 
dismissed  them  without  having  obtained  anything. 

Shortly  afterwards,  in  November,  1640,  the  sixth  Parlia-  The  Long 
ment  was  convened ;  this  was  to  be  the  Long  Parliament  that     arhament 
was  to  outlive   the   King.      The   new   representatives   sum- 
moned the  sheriffs  in  charge  of  collecting  the  ship-money 
tax  to  appear  as  offenders  before  the  Parliament,  and  drew 
up  the   "Remonstrances";   these  were   in  the  nature  of  an 
appeal  to  the  people  in  which  all  the  violations  of  the  "peti- 
tion of  rights"  were  enumerated.     Thereupon,  the  situation 
became  aggravated  to  such  an  extent  that  civil  war  was  the 
result  of  these  parliamentary  struggles.     In  1642  Charles  I 
was  forced  to  leave  London.     Shortly  afterwards  the  armies 
of  the  Crown  and  of  Parliament,  the  two  powers  most  re- 
spected in  England,  were  facing  each  other.     In   1648  the  The 
King  was  made  prisoner,  and  on  January  3,  1649,  he  was  be-   16^2°  1649" 
headed  in   front  of  White  Hall  Palace.     History  gives  all 
the  details  of  this  bloody  solution  of  the  conflict. 

There  is  no  doubt  that  during  these  twenty-three  years  of 
struggle  the  discussion  of  budgetary  questions  had  a  de- 
cisive influence  upon  the  destinies  of  England.  It  was  the 
need  of  subsidies  which  finally  had  forced  the  King  to  con- 
vene the  Commons  periodically,  and  the  discussions  relating 
to  these  subsidies  increasingly  embittered  the  people  and 
stirred  them  up  to  a  pitch  to  insist  on  their  rights.  Finally, 
the  imposing  of  illegal  taxes,  the  introduction  of  the  ship- 
money  tax  in  particular,  became  the  immediate  grievance 
that  caused  the  people  to  rise  in  revolution  against  the  assump- 
tions of  the  King. 

After  Monk  had  reinstated  the  Stuarts  the  situation  was 

15 


THE  BUDGET 


not  changed.  Charles  II,  like  his  predecessors,  had  an  in- 
dependent revenue  consisting  of  farm-rents,  feudal  annuities 
and  some  permanent  or  life  subsidies.  The  Commons  granted 
him  only  complimentary  subsidies  to  make  up  the  sums  neces- 
sary to  meet  regular  needs  and  extraordinary  expenditures. 

All  revenues,  however,  regardless  of  their  source  and  with- 
out distinction,  were  turned  over  to  the  Treasury  of  the 
King,  who  used  these  revenues  at_will  and  wiihout_coriJtrpl 
either  for  his  personal  expenditures  or  for  expenditures  of 
the  State.  Thus  he  found  himself  forced  to  expose  his  in- 
timate affairs  to  Parliament  in  order  to  get  assistance.  "Since 
ascending  the  throne,"  he  said  to  the  Parliament  in  1660,  "I 
have  been  unable  to  give  one  single  shilling  to  my  brothers, 
or  to  maintain  a  table  other  than  the  one  at  which  I  myself 
sit.  What  causes  me  the  greatest  pain,  however,  is  to  see 
some  of  you  coming  to  White  Hall  and  then  having  to  go  out 
again  to  get  a  dinner."  At  another  time  he  volunteered  to 
submit  his  personal  expenditures  for  verification  by  the  Com- 
mons, stating  that  the  burden  of  these  expenditures  was  very 
heavy  on  him  during  the  last  year. 

It  was  the  mingling  of  the  king's  private  income  with 
the  public  income  that  Parliament  tried  to  reform  in  order 
to  establish  an  efficient  control  especially  over  the  manage- 
ment of  state  funds.  For  that  reason  certain  subsidies,  such 
as  the  subsidies  for  building  of  ships,  were  voted  only  after 
the  costs  of  the  work  were  first  estimated.  It  was  expected 
that  such  a  procedure  would  prevent  the  use  of  the  money 
for  other  than  its  intended  purposes  and  that  the  appropria- 
tions would  not  be  exceeded.  "The  result,  however,"  says 
David  Hume,  "showed  that  the  real  expenditure  exceeded  the 
appropriation  by  about  £100,000."  Later  on,  in  1668,  a  com- 
mission of  the  Commons  attempted  to  examine  also  the  ac- 
counts of  expenditures  resulting  from  the  voted  subsidies. 
The  commission  discovered  a  shortage  of  about  £1,500,000, 
although  the  King  claimed  he  had  contributed  some  of  his 
own  money. 

The  old  controversy  between  the  Crown  and  Parliament, 
fed  this  time  by  religious  passions,  caused  long  and  frequent 
adjournments  of  Parliament.  During  one  of  these  adjourn- 
ments the  King,  not  daring  as  yet  to  impose  arbitrary  taxes, 
promised  the  office  of  Grand  Treasurer  (Lord  of  the  Ex- 
chequer) to  the  person  who  would  help  him  out  of  his  finan- 
cial troubles.     Shaftesbury,  in  order  to  gain  the  promised 

16 


DEFINITION  OF  THE  WORD  "BUDGET" 

reward,  ordered  the  Exchequer  closed  on  January  2,  the 
date  on  which  the  repayment  of  funds  entrusted  to  the  Treas- 
ury was  due.  This  sudden  suspension  of  payments  caused  the 
insolvency  of  a  good  many  banks.  This  is  the  only  state 
bankruptcy  (January  2,  1672)  of  which  England  is  guilty 
in  all  its  financial  history.  It  must  be  added  that  later  on 
the  victims  of  the  bankruptcy  were  indemnified. 

The  struggles  against  Parliament  continued,  and  were  still  Defiant 
more  bitter  under  James  II  than  they  had  been  under  his  elder  jame"s'*ii'^ 
brother.     He  issued  an  ordinance  decreeing  the  levying  of 
excise  duties — a  right  which  had  been  granted  to  Charles 

II  for  the  duration  of  his  reign  only.  To  the  criticisms  of 
the  Commons,  the  King  replied :  "The  method  of  supplying 
the  Crown  at  intervals  with  insufficient  subsidies  seems  to 
be  resorted  to  as  a  means  of  insuring  frequent  sessions  of 
Parliament."  This,  he  assured  them,  would  have  no  success ; 
"the  best  way  to  induce  the  Crown  to  convene  Parliament 
is  to  use  the  Crown  right." 

The  same  tendencies  to  establish  absolute  government  and 
the  same  obstinacy  to  levy  taxes  without  the  authorization 
of  Parliament  prevailed  with  the  Stuarts  before  and  after  Accession 
the  Revolution  of  1648.     At  two  different  times  this  attitude  anJ^Ma^'" 
of  the  Stuarts  had  the  same  consequences.     Without  going  ^ 

into  the  details  of  this  new  .conflict,  it  is  sufficient  to  men- 
tion that  the  Revolution  of  u688  was  its  epilogue.     William 

III  of  Orange  with  Princess  Mary,  having  landed  in  England, 
ascended  the  throne  of  his  defeated  and  fugitive  father-in-law. 

The  accession  of  William  represented  the  triumph  of  the  TJie  Con- 
principles  for  which  the  natiort  had  fought  for  over  half  a  pj|nc^p|es 
century.     No  time  was  lost  in  applying  these  principles  in  Established 
practice.     Henceforth,  an  absolute  division  was  established 
between  the  private  funds  of  the  king  and  those  of  the  nation. 
The  funds  appropriated  for  the  expenditures  of  the  Crown  "n/ 
were  entirely  segregated  from  the  funds  appropriated  for  the 
expenditures  of  the  State.     This  was  the  beginning  oi'whati 
is  called  the  Civil  List. 

Macaulay  furmshes  interesting  information  on  the  origin 
of  the  term;  he  writes  (History  of  England  Under  William 
III)  as  follows :  "Out  of  this  income  [granted  to  the  Crown] 
was  to  be  defrayed  the  charge  both  of  the  royal  household 
and  of  those  civil  officers  of  which  a  list  had  been  laid  before 
the  House.  This  income  was,  therefore,  called  the  Civil  List. 
The  expenses  of  the  royal  household  are  now  entirely  sepa- 

17 


THE  BUDGET 


The  Right 
of  Represen- 
tatives— 
Control 
Never 
Again 
Contested 
in  England 


n/ 


rated  from  the  expenses  of  civil  government :  but,  by  a  whim- 
sical perversion,  the  name  of  Civil  List  has  remained  attached 
to  that  portion  of  the  revenue  which  is  appropriated  to  the 
expenses  of  the  royal  household.  It  is  still  more  strange  that 
several  neighboring  nations  should  have  thought  this  most 
unmeaning  of  all  names  worth  borrowing." 

We  have  then,  on  one  side,  funds  of  which  the  sovereign 
may  dispose  at  will  for  his  personal  use;  and,  on  the  other 
hand,  public  funds,  the  management  and  control  of  which 
rests  exclusively  with  the  representatives  of  the  country. 

In  1789,  France  came  to  realize  the  necessity  for  this  dis- 
tinction. 

Until  then,  says  David  Hume,  there  was  no  distinction 
between  the  funds  appropriated  for  the  Crown  and  those 
which  were  appropriated  for  the  public  service;  both  catego- 
ries of  funds  were  at  the  disposal  of  the  sovereign.  It  was 
agreed  to  set  aside  special  revenues  for  the  maintenance  of 
the  royal  household  and  expenditures  befitting  the  dignity  of 
the  Crown.  The  balance  of  public  funds  was  to  be  subject 
to  the  action  of   Parliament. 

After  Parliament  had  added  to  the  Civil  List  certain  un- 
changeable and  inevitable  expenditures,  such  as  the  interest  on 
the  public  debt  and  the  various  endowments,  this  entire  group 
having  been  voted  once  and  forever,  was  given  the  name  of 
"Consolidated  Fund,"  which  exists  until  this  day.  All  other 
public  expenditures  remained  strictly  dependent  on  the  annual 
vote  of  Parliament. 

As  far  as  taxes  are  concerned,  the  Bill  of  Rights  passed 
and  approved  in  1688  again  fixed  the  exclusive  right  of  ap- 
proval in  the  assembly  of  representatives  of  the  country  [the 
Commons].  From  1688,  the  time  of  the  accession  of  William 
III,  the  right  of  the  people  and  their  representatives  to  control 
the  purse  (the  so-called  budget  prerogative)  was  thus  defi- 
nitely established ;  from  this  time  on  Parliament  has  possessed 
the  uncontested  right  to  authorize  public  revenues  and  ex- 
penditures. Raynal  says  that  the  right  to  control  the  purse 
as  finally  settled  became  for  England  "the  instrument  and 
the  rampart  of  liberty." 


18 


DEFINITION  OF  THE  WORD  "BUDGET" 


Origin  of  the  Right  to  Control  the  Public  Purse  in 
,     the  United  States 

The  English  Parliament  extending  its  authority  over  the 
vast  colonial  possessions  of  North  America,  decided  in  1765 
to  force  these  colonies  to  contribute  toward  the  expenses  in- 
curred by  the  mother  country  in  their  pro'tection  and  defense. 
For  that  purpose  the  House  of  Commons  ordered  on  its  own 
authority  the  establishment  of  the  stamp  tax  (March  8,  1765) 
in  America,  which,  notwithstanding  its  dependence,  until  then 
had  always  voted  its  own  taxes.  For  this  reason  the  minister, 
George  Granville,  used  the  greatest  possible  prudence  in  in- 
troducing this  innovation  and  he  was  careful  enough  to  en- 
trust the  levying  of  this  new  tax  to  American  agents. 

All  seemed  quiet  in  the  beginning.  But  soon  the  local  as- 
sembly of  Virginia,  influenced  by  one  of  its  members,  Patrick 
Henry,  refused  to  recognize  the  tax  established  by  the  Eng- 
lish Parliament  in  which  the  American  colonies  were  not 
represented.  The  Assembly  of  Virginia  resolved  that  the 
^'General  Assembly  of  the  Colony  had  the  exclusive  right  and 
power  to  impose  taxes  on  its  inhabitants."  This  protest  of 
Virginia  was  the  spark  which  set  the  entire  nation  aflame. 
Delegates  appointed  from  all  parts  of  the  country  assembled 
in  congress  in  New  York  and  declared  that  every  tax  paid 
to  the  Crown,  being  a  free  gift  of  the  people,  it  would  be 
unreasonable  and  contrary  to  the  constitution  of  England 
that  the  Parliament  of  Great  Britain  should  surrender  to  His 
Majesty  the  substance  of  the  colonies.     (Oct.  16,  1765.) 

Thus  we  see  that  America  plied  England  with  the  same  ar- 
guments that  England  had  used  a  century  before  to  protect 
its  own  liberties  against  its  King.^  On  account  of  the  great 
unrest,  Parliament  repealed  the  stamp  tax  on  March  5,  1766, 
one  year  after  having  voted  it.  Unfortunately,  Great  Brit- 
ain soon  returned  to  its  ideas  of  supremacy,  substituting 
for  the  stamp  tax,  on  June  29,  1767,  a  duty  on  glass,  paper, 
dyes  and  tea. 

The  rate  of  these  four  taxes  was  low;  the  entire  revenue 
from  them  was  not  to  exceed  1,000,000  francs  ($200,000). 

^  "The  spirit  which  in  America  resisted  the  stamp  tax  was  the  same 
spirit  which  in  earlier  times  formed  the  fundamental  basis  of  British 
liberties,  to  wit,  that  an  English  subject  could  not  be  taxed  without 
his  own  consent." — Cornelis  de  Witt.  Histoire  de  Washington, 
Paris,  1855. 

19 


Denial  of 
Right  of 
Representa- 
tive Control 
to  Colonies 


Protest  of 

Patrick 

Henry 


Duties  Fixed 
on  Imports 
Without 
Consent 


THE  BUDGET 


Protests  in 
England 


The  Black- 
listing of 
English 
Goods 


Insurrec- 
tions— the 
Boston  Tea 
Party 


It  was  not  at  all  a  question  of  money.  "Our  purses  are 
open,"  said  the  people  of  America,  "but  we  want  to  pay  as 
citizens  and  not  as  slaves."  Washington  wrote,  asking: 
"What  is  the  whole  thing  about,  and  what  are  we  quarreling 
over?  Is  it  the  payment  of  a  tax  of  six  sols  per  pound  of 
tea?"  "No,"  was  his  answer;  "we  are  only  contesting  the 
right  to  impose  sucl^  a  tax." 

Even  in  the  English  Parliament  voices  were  raised  advo- 
cating the  right  of  citizens  to  tax  themselves-:  "When  in 
this  chamber,"  said  Lord  Chatham,  "we  vote  a  tax,  we  only 
vote  on  what  belongs  to  us.  What  are  we  doing  with  re- 
gard to  America?  We,  the  Commons  of  England,  dispose 
of  the  substance  of  the  commons  of  America.  We  cannot 
take  money  out  of  their  pockets  without  their  consent." 

The  colonial  assemblies  acting  upon  the  initiative  of  the 
Assembly  of  Virginia  pledged  themselves  to  use  no  more 
English  goods  until  the  bill  of  1767  was  repealed.  The  women 
refused  to  wear  apparel  coming  from  the  mother  country, 
and  local  newspapers  congratulated  them  on  their  decision. 
One  paper  said :  "We  are  going  to  see  the  female  sex  charm- 
ing in  its  natural  beauty  when  the  spirit  of  supreme  patriotism 
will  be  its  only  ornament."  The  city  of  Boston  distinguished 
itself  by  armed  resistance. 

The  House  of  Commons,  again  judging  it  to  be  an  act  of 
prudence,  revised  its  vote,  repealing  the  bill  of  1767.  But  they 
modified  their  views  only  so  far  as  concerned  duties  on  glass, 
dyes  and  paper.  The  duty  on  tea  was  maintained  in  order 
to  assert  the  supremacy  of  Parliament  (bill  of  March  5, 
1770).  This  moderate  tax  left  on  one  commodity  only,  the 
annual  revenue  from  which  it  was  thought  would  not  exceed 
300,000  francs  ($60,000),  became  the  signal  for  the  War  of 
Independence,  because  the  American  people  held  out  for  a 
vital  principle. 

Riots  and  massacres  in  Boston,  the  pillaging  of  vessels  of 
the  East  India  Company,  cargoes  of  tea  thrown  into  the 
sea,  the  prohibition  of  the  use  of  this  beverage  in  the  colo- 
nies ^  and  the  beginning  of  a  general  insurrection  were  the 


1  The  historian  Raynal  describes  as  follows  the  incidents  which 
accompanied  the  prohibition  of  tea  in  America :  "Ship  masters  refuse 
to  take  this  article  on  board.  The  shop  keepers  to  whom  the  ship- 
ments are  consigned  refuse  to  receive  it.  One  who  would  dare  to 
sell  tea  is  considered  here  an  enemy  of  the  country.  Those  who 
would  store  tea  in  their  storerooms  are  charged  with  infamy.    Several 


20 


DEFINITION  OF  THE  WORD  "BUDGET'* 

first  responses  to  the  bill  of  March  5,  1770.  England  became  The 
obstinate  in  its  resolutions  in  spite  of  the  protestations  of  ^"^erican 
Burke  and  Lord  Chatham.  America  voted  its  Declaration 
of  Rights  at  the  Congress  of  Philadelphia  in  1774  in  which 
it  was  stated:  "We  reject  every  idea  of  an  interior  or  ex- 
terior tax,  the  object  of  which  would  be  to  levy  a  revenue 
from  citizens  of  America  without  their  consent."  On  April 
i9>  ^775y  occurred  the  first  small  battle  of  Lexington;  an  army 
was  organized;  Washington  was  placed  at  its  head;  on  July 
4,  1776,  the  "Declaration  of  Independence"  was  proclaimed; 
and  the  war  continued  until  the  treaty  of  November  30,  1782, 
which  was  definitely  ratified  by  the  treaty  of  peace  of  1783, 
recognizing  the  independence  of  the  United  States. 

In  1778,  while  hostilities  were  going  on,  the  English  Par-  American 
liament,  after  the  decisive  ^victory  at  Saratoga,  repealed  the  ^"^^^P^n- 
tax  on  tea  and  declared  expressly  that  no  tax  would  hence- 
forth be  imposed  on  America  by  the  English  Parliament  (Bill 
of  March  11,  1778). 

Establishing   the    Right    to    Control  "  the    Purse   in 

Prussia 

The  provisions  of  the  Prussian  constitution  of  January  31, 
1850,  which  in  an  explicit  way  guaranteed  that  control  over 
public  revenues  and  expenditures  would  rest  with  the  repre- 
sentatives of  the  country,  were  seriously  jeopardized  between 
1862  and   1866.     The  Landtag,  or  chamber  of  deputies  in  Recognition 
Prussia  in  1862,  cut  out  of  the  budget  the  appropriations  in-  of  Represen- 
tended  to  cover  expenditures  of  military  reorganization  which  lr(A\n  1850 
the  Government  proposed  at  that  time;  this  reorganization 
plan  was  based  on  the  establishment  of  universal  and  obli- 
gatory military  service.    Then  the  Prime  Minister,  Bismarck, 
abruptly  withdrew  the  budget  bill  from  the  Chamber  of  Depu- 
ties and  dared  to  submit  it  directly  for  discussion  by  the  upper 
house;  (Herrenhaus),  which  was  servile  enough  to  pass  it. 

portions  of  the  country  have  solemnly  renounced  the  use  of  this 
beverage.  A  great  number  of  people  have  burned  their  stock  of  this 
weed  which  hitherto  was  a  delicacy.  The  tea  shipped  to  this  section 
of  the  globe  was  valued  at  five  or  six  millions  and  not  a  single  box 
was  landed."  It  is  to  be  added  that  the  American  Custom  House 
authorities  yielded  to  England  in  1772  only  2125  francs  ($455)  from 
duties  on  tea  and  that  the  East  India  Company  lost  all  its  Stock  of 
tea  which  was  thrown  into  the  sea  or  left  to  rot  in  storerooms. 

21 


THE  BUDGET 


Violation  of 
Principle 


Attempted 
Justification 
by  Bismarck 


Admissions 
of 
William  I 


Thus  the  budget  for  the  fiscal  year  1863  was  approved  by 
only  one  house,  the  house  not  elected  by  popular  vote,  and 
the  budget  was  put  into  execution  from  January  i,  1862,  to 
1866,  in  direct  violation  of  the  text  of  the  constitution  of 
January  i,  1850.  In  spite  of  the  protests  of  the  deputies,  the 
same  illegal  act  was  repeated  for  three  consecutive  years — 
that  is  for  1864,  1865  and  1866.  Thus  four  successive  budg- 
ets did  not  have  the  approval  of  the  legislature. 

As  every  practice  is  bound  to  find  some  theory  justifying  it, 
so  the  theory  by  which  Bismarck  tried  to  justify  his  proce- 
dure was  as  follows:  The  Chamber  of  Deputies  cannot  pos- 
sibly claim  the  exclusive  right  to  establish  the  budget;  as 
a  matter  of  fact,  article  62  of  the  Constitution  of  1850 
says  that  the  legislative  power  is  exercised  jointly  by  the  king 
and  by  the  two  chambers;  the  Constitution  contains  no  pro- 
vision as  to  who  must  yield  in  case  of  a  disagreement.  "The 
budget  is  not  established;  the  condition  is  an  abnormal  one; 
the  Constitution  offers  no  solution ;  the  sole  solution,  therefore, 
must  be  found  in  compromise;  if  the  compromise  does  not 
succeed,  a  conflict  begins,  and,  as  the  life  of  the  State  could 
not  be  stopped,  this  conflict  becomes  a  question  of  power; 
the  person  who  has  the  power  in  his  hands  proceeds  then 
according  to  his  opinion"  (January  27,  1863). 

From  this  it  can  readily  be  seen  what  violent  conclusions 
were  reached  by  the  Chancellor  in  the  heat  of  parliamentary 
discussion.  Without  following  the  various  phases  of  the 
struggle,  let  us  say  at  once  that  in  1866,  when  the  war  between 
Prussia  and  Austria  broke  out,  the  battle  at  Sadowa  vic- 
toriously demonstrated  the  merits  of  the  military  reforms 
which  were  put  into  effect  in  spite  of  a  resistance  on  the 
part  of  the  Chamber  of  Deputies.  The  latter  had  then  to 
give  up  resistance  in  order  to  live  up  to  its  patriotic  duty. 

It  is  quite  remarkable  to  see  with  what  modest  submissive- 
ness  both  the  King  and  his  Prime  Minister  excused  them- 
selves of  the  illegality  which  they  deemed  necessary  to  com- 
mit. King  William  expressed  himself  as  follows :  "In  these 
last  years  the  budget  could  not  be  established  in  accord  with 
the  national  representation.  The  public  expenditures  which 
were  made  during  the  period  lack  legal  basis"  (August  3, 
1866).  The  King  admitted  that  there  had  been  a  breach  of 
law ;  he  asked  the  Chambers  to  help  him  to  enter  on  the  road 
to  legality  once  more  and  he  himself  promised  not  to  deviate 
from  this  road  again.     "Thus,"  added  the  King,  "the  conflict 

22 


DEFINITION  OF  THE  WORD  ^'BUDGET" 

will  be  stopped  forever."  This  attitude  clearly  shows  the 
power  of  the  principle  of  the  right  [of  representatives  of  the 
people]  to  control  the  purse,  before  which  even  a  victorious 
Government  had  to  yield.  ' 

Origin  of  the  Right  in  Other  Countries:  Other  examples 
besides  the  one  of  France — on  which  we  shall  dwell  in  the 
next  chapter — could  be  added  to  the  preceding  examples,  par- 
ticularly the  civil  war  in  Chili,  caused  in  1891  by  the  encroach- 
ments on  the  budget  committed  by  President  Balmaceda.  In 
1 909-1 9 10  the  refusal  of  the  House  of  Lords  to  approve  the 
budget  of  Mr.  Lloyd-George,  voted  by  the  House  of  Com-  ' 
mons,  necessitated  general  elections  and  deeply  agitated  the 
country.  Finally,  the  act  of  August  18,  191 1,  cost  the  House 
of  Lords  its  old  prerogatives  in  financial  matters.  In  the  same 
way,  in  Russia,  the  revolutionary  occurrences  of  1905  com- 
pelled the  autocratic  Government  to  submit  henceforth  its 
budgets  to  the  Imperial  Duma.  ^ 

Everywhere  and  at  all  times  the  primary  importance  of 
the  budget  prerogative  in  the  life  of  nations  is  obvious. 


23 


CHAPTER  II 

CONTEST  OVER  CONTROL  OF  THE  PURSE  IN 

FRANCE 

Period  of  the  Etats  Generaux:  Beginning  of  Period;  Early  Assem- 
blies Not  Representative;  First  Took  Cognizance  of  Finances  in 
1314;  King  Takes  Advantage  of  Act  of  £tats  Generaux;  Annual 
Meetings  from  1355-1359;  Greatest  Power  Under  John  the  Good; 
A  Lapse  of  Forty  Years ;  Arbitrary  Attitude  of  Charles  V ;  Appeal 
to  the  Assembly  During  the  Hundred  Years'  War;  Frequent  Meet- 
ings Under  Charles  VII;  The  Last  Meeting  Before  the  Revolution; 
Tenacity  With  Which  Nation  Held  to  Representative  Control ;  Pre- 
rogative of  the  Principle;  Efforts  to  Usurp  Functions  of  Executive; 
A  Lapse  of  One  Hundred  Seventy-five  Years ;  Not  Convened  After 
1614;  The  Cataclysm  in  Store  for  France. 

The  Period  of  the  Parlements;  Parlements  Not  Representative; 
Were  Entirely  Subservient  to  the  King;  Illustration  of  Its  Obse- 
quiousness; Absolutism  Unchecked;  Parlement  Finally  Became  a 
Body  of  Protest;  Reconvening  of  the  Etats  Generaux;  Announces 
the  Right  of  the  People  to  Control  the  Purse. 

Establishment  of  the  Modern  Budgetary  System  in  France:  Right 
of  Popular  Control  Over  the  Purse  Demanded;  Right  of  Repre- 
sentatives of  the  Nation  to  Control  Revenues  First  Recognized; 
Under  the  Law  of  1789;  Infractions  of  Law  by  Napoleon;  A  Factor 
in  the  Estrangement  of  the  French  People;  Two  Later  Infractions; 
Recognition  of  the  Right  to  Control  Expenditures  Comes  Later; 
Question  Raised  as  to  Whether  it  Was  a  Representative  Function; 
Demanded  Only  Accountability;  Technic  of  Control  Over  Expen- 
ditures Not  Developed;  Expenditures  of  State  and  Royal  House 
Confused;  Effort  Made  by  Legislature  to  Invade  the  Executive 
Field;  Encroachment  of  Legislature  on  Powers  of  Executive;  Jeal- 
ously and  Suspicion  of  Two  Branches;  Claims  of  Reactionaries; 
Right  to  Inquire  Into  Needs  Claimed  as  Essential  Part  of  Control 
of  Purse;  Sanctioned  by  Law  of  1817;  Reconcilement  of  Right  of 
Control  With  the  Principle  of  Executive  Leadership. 

The  history  of  the  budget  in  France  may  be  divided  into 
three  parts  : 

1.  The  period  of  the  Etats  Generaux. 

2.  The  period  of  the  Parlements. 

3.  The  period  of  the  organization  of  the  present  regime. 

24 


CONTEST  OVER  CONTROL  OF  THE  PURSE 


Period  of  the  Etats  Generaux 

The  first  of  these  three  periods,  that  is,  the  period  of  the 
Etats  Generaux,  ended  in  1614,  during  the  minority  of  Louis 
XIII,  and  under  the  regency  of  Mary  de  Medicis.  From  1614 
until  1789,  the  representatives  of  the  nation  did  not  convene. 

Although  it  is  easy  to  say  when  the  institution  of  the  Etats  Beginning 
Generaux  came  to  an  end  in  France,  it  is  much  more  difficult  °^  Period 
to  give  its  precise  date  of  origin.     Some  historians  place  it 
as  far  back  as  422,  the  time  of  Pharamond,  when  the  Salic 
Law   was   established.     Next  came  the  conventions  known 
under  the  name  of  Champ  de  Mars  or  Champ  de  Mai. 

Early  Assemblies  not  Representative :  Modern  scientific 
historical  researches  have  shown  that  until  the  seventh  century^ 
there  was  no  general  assembly  of  the  people.^  The  later  gen-' 
eral  conventions  (Conventus  Generalis)  were  not  assemblies 
of  the  people.  The  people  attended  those  conventions  under 
the  leadership  of  their  local  chiefs,  counts  or  bishops;  the 
king  conferred  only  with  the  nobility,  holding  aloof  from 
the  crowd;  he  showed  himself  to  the  people  at  the  last  ses- 
sion only,  at  which  time  either  he  or  the  majordomo  addressed 
them;2  at  the  most,  the  people  had  the  liberty  of  applauding 

^  "It  is  necessary  to  avoid  all  possible  double  meaning.  We  shall 
find  a  good  many  large  assemblies  of  men;  but  not  every  assembly 
of  men  is  a  national  assembly.  By  national  assembly  we  understand 
a  regular  convening  of  an  organized  people  or  of  its  representatives 
— an  assembly  which  is  formed  legally  with  powers  determined  by 
laws  or  by  traditional  practice,  an  assembly  which  deliberates,  dis- 
cusses and  decides  the  interests  of  the  people  in  question." — Fustel 
de  Coulanges. 

2  "With  all  that,  we  do  not  see  a  single  action  on  the  part  of  the 
people.  The  people  were  quite  ready  to  deliberate,  but  they  never  had 
a  chance.  No  question  was  submitted  to  the  people.  The  people 
remained  camping  on  the  plain  and  waited.  After  the  king  had 
made  all  his  decisions  jointly  with  his  nobility,  he  remembered  his 
people  who  were  waiting  and  showed  himself.  This  was  the  closing 
session  of  the  assembly,  and  it  was  always  a  solemn  occasion.  The 
people  offered  its  annual  gifts  to  the  king.  After  this  the  majordomo, 
speaking  in  the  name  of  the  king,  transmitted  the  latter's  order  to 
the  people.  Then  the  decisions  made  by  the  king  and  his  nobility  at 
the  previous  meeting  were  communicated  to  the  people.  The  latter 
had  no  power  to  discuss  them,  although  it  may  have  been  the  practice 
for  the  people  to  approve  them  through  acclamation." — Fustel  de 
Coulanges. 

25 


THE  BUDGET 

the  address.  All  these  details  are  discussed  with  much  erudi- 
tion in  the  work  of  M.  Fustel  de  Coulanges.^ 
P  In  the  Middle  Ages  the  feudal  assemblies  were  invariably 
composed  of  the  grand  vassals,  barons  and  dignitaries  of  the 
church  2  who,  after  having  promised  a  subsidy  to  the  king, 
took  upon  themselves  the  task  to  recover  the  total  of  this 
subsidy  from  their  own  subjects  without  consulting  them 
at  all. 

*To  consider  these  assemblies,"  Vuitry  says,  *'as  hav- 
ing constituted  since  that  period  national  representative 
bodies  would  mean  to  be  misled  by  modern  ideas  and  ex- 
pressions which  cannot  be  applied  to  the  middle  ages  and 
feudal  institutions."  ^  {Etude  sur  le  regime  financier  de 
la  France. ) 

First  Took  Cognisance  of  Finances  in  1314:  The  first 
Etats  Generanx  which  busied  themselves  with  financial  ques- 
tions were  convened  in  13 14  under  Philippe  the  Fair.*  A 
few  year^  prior  to  that  a  certain  number  of  barons  and  dig- 
nitaries of  the  church  were  convened,^  but  as  they  declared 
themselves  deprived  of  sufficient  power  to  force  contributors 

1  Fustel  de  Coulanges.  Histoire  des  institutions  politiques  de 
Vancienne  France,  1888. 

2  "It  was  an  ancient  tradition  of  the  feudal  kings  to  convene 
frequently  the  dignitaries  of  the  church  and  the  barons,  not  so  much 
for  the  purpose  of  being  enlightened  by  them  as  to  give  more  weight 
to  the  actions  of  the  Crown." — Vuitry. 

^  Proudhon  expresses  it  more  freely:  "This  point  is  to  be  noted: 
the  people  were  not  called  uppn  to  vote;  that  went  without  saying; 
the  people  voted  nothing.  Those  who  were  called  upon  to  vote  were 
the  direct  and  immediate  chiefs  of  the  people :  land  owners,  abbots, 
dignitaries  of  the  church,  burghers  and  masters  of  professions,  etc., 
who  drew  their  income  from  the  people."     (Theorie  de  I'impdt.) 

*  George  Picot,  in  his  Histoire  des  Etats  Generanx,  which  is  justly 
considered  a  classic  on  the  subject,  indicates  that  the  assemblies  of 
1302,  1308  and  1314  were  the  first  three  to  show  the  characteristics 
of  the  States  General  in  France.  But  as  the  assemblies  of  1302  and 
1308  occupied  themselves  only  with  the  quarrels  between  the  King 
on  one  side  and  the  Pope  and  the  Knights  Templars  on  the  other,  it 
.remained  for  the  assembly  of  1314  to  introduce  the  question  of 
subsidies. 

^  The  Council  of  1305,  composed  of  a  small  number  of  barons  and 
dignitaries  of  the  church,  declared  that  archbishops,  bishops,  deans  of 
convents  and  colleges,  dukes,  counts,  barons  and  women  and  girls  of 
the  nobility  were  supposed  to  help  "their  king."  These  proposed 
contributors  were  by  no  means  anxious  to  carry  out  the  decision 
of  this  Council. 

26 


CONTEST  OVER  CONTROL  OF  THE  PURSE 

to  comply  with  their  resolutions,  the  King  decided  on  a  surer 
way  of  obtaining  the  subsidies  which  he  badly  needed  and 
addressed  himself  directly  to  the  representatives  of  the  people. 

In  consequence,  at  the  assembly  of  IJ14- — which  convened  King  Takes 
at  the  palace  of  la  Cite  in  Paris,  under  the  chairmanship  of  ^^^^vantage 
the  King  and  of  Enguerrand  de  Marigny — the  nobles,  the    uf  Etats 
dignitaries  of  the  church,  the  burghers  and  the  municipal  of-  Generaux 
ficers  declared  their  "readiness  to  give  assistance  to  the  King, 
everyone  doing  what  is  in  his  power,  according  to  his  ability." 
By  virtue  of  this  single  and  vague  declaration,  the  King,  as 
soon  as  the  meeting  was  closed,  issued  an  ordinance  based  on 
his  own  authority,  establishing  taxes  on  fuel  and  taxes  on 
sales  of  merchandise.^  *  _j 

After  Philippe  the  Fair,  only  three  conventions  of  the  Etats 
Provinciaiix  or  Generaux  will  be  mentioned — those  under 
Louis  X  (the  Stubborn),  Philippe  the  Long  and  Phihppe 
the  Sixth;  then  we  come  to  a  period  of  more  important  as- 
semblies, especially  under  King  John,  when  they  acquire  more 
regular  form. 

Annual  Meetings  from  1 355-1 359:  When  at  the  end  of  Greatest 
1355  a-  general  war  broke  out  with  England  and  all  financial  ^^a^^ 
resources  were  exhausted,  John  the  Good  obtained  from  the  the  Good  " 
Etats  Generaux,  which  convened  in  Paris  on  December  2, 
1355,  the  right  to  place  duties  on  salt.  After  the  unfortu- 
nate battle  of  Poitiers,  where  the  King  of  France  was  taken 
prisoner,  the  Etats  Generaux  were  convened  by  summons  of 
the  Dauphin  in  1356,  1357,  1358,  and  1359,  in  order  to  vote 
the  necessary  subsidies  for  the  continuation  of  the  war  against 
England  and  for  paying  the  ransom  of  the  King.  These  last 
Etats  Generaux  began  to  develop  the  idea  of  national  repre- 
sentation. "In  October,  1356,"  says  Augustin  Thierry,  "the 
deputies  came  to  the  number  of  more  than  eight  hundred, 
four  hundred  of  whom  belonged  to  the  class  of  burghers; 
they  were  animated  with  a  zeal  quite  approaching  revolu- 
tionary enthusiasm."  This  movement,  however,  was  only  of 
short  duration  and  did  not  outlive  the  period  of  disaster  by 
which  it  was  caused.^ 

*  Several  cities  of  Normandy  and  Picardy,  however,  opposed  the 
establishing  of  a  tax  on  merchandise,  which  fact  indicates  that  not 
all  the  cities  of  France  gave  their  consent  and  that  the  Etats  of  1314 
were  not  really  general. 

2  At  this  time  the  national  representation,  even  in  the  Etats  Gene- 
raux which  were  regularly  convened,  was  very  far  from  perfect.  "The 

27 


THE  BUDGET 

A  Lapse  of  Forty  Years:  Charles  V  in  the  first  years  of 
his  reign  gave  Httle  heed  to  the  Etats  Generaux.  "The  memo- 
ries of  the  time  of  his  regency,"  says  George  Picot,  "could 
hardly  induce  the  new  King  without  imperative  necessity  to 
Arbitrary  meet  with  the  deputies  who  ten  years  before  tried  to  submit 
ChaHM  V  *!^^  authority  of  the  sovereign  to  their  control."  In  1367  a 
simple  convention  of  the  notables  of  the  kingdom  took  place. 
In  1369  the  three  estates  convened  under  conditions  which 
gave  them  fuller  powers:  "Dignitaries  of  the  church,  nobles 
and  the  people  of  the  good  cities  assembled  in  large  numbers 
from  all  the  provinces,"  and  decided  upon  the  war  against 
England,  and  six  months  later  appropriated  taxes  and  sub- 
sidies made  necessary  by  the  renewal  of  hostilities.  Thus, 
between  1359  and  1369,  ten  years  elapsed  without  the  Etats 
Generaux  having  been  called. 

Appeal  to  the  Assembly  During  the  Hundred  Years'  War: 
After  the  five  assemblies  which  convened  under  King  John 
between  1355  and  1359/  and  after  the  assembly  held  under 

composition  of  these  assemblies,"  says  Ad.  Vuitry,  "corresponded  to 
the  social  condition  of  the  country.  It  was  the  picture  of  France,  but 
of  feudal  France."  Ad.  Vuitry.  Etudes  sur  le  regime  financier  de  la 
France  avant  la  Revolution  de  1789,  Nouvelle  Serie. 

Henrion  de  Pansey  quotes  and  comments  on  the  text  of  the  orders 
of  convocation  for  the  last  Etats  Generaux  in  1614  to  Bailiffs  and 
senechals  and  arrives  at  an  analogous  conclusion.  "It  is  clear,"  he 
says,  "that  in  all  these  preliminaries  it  is  not  a  question  of  villages; 
the  cities  only  enjoy  the  privilege  of  sending  deputies  to  the  Etats 
Generaux  and  it  is  easy  to  find  the  motives  for  this  preference.  It  is 
explained  by  the  deplorable  condition  to  which  the  inhabitants  of  the 
villages  and  even  the  inhabitants  of  a  large  number  of  cities  were 
reduced  in  those  times."  Henrion  de  Pansey.  Des  assemblees  nation- 
ales  en  France. 

^  The  historian  Mezeray,  whose  pension  of  4000  francs  Colbert 
wished  to  discontinue  because  Mezeray  in  his  Ahrigi  chronologique 
de  VHistoire  de  France  insisted  too  much  upon  the  necessity  of  a  tax 
being  approved  by  the  Etats  Generaux,  says  of  the  reign  of  "John 
the  Good":  "The  burdens  of  the  war  could  be  met  only  by  heavy 
expenditures  and  at  that  time  no  taxes  were  levied  without  the 
consent  of  the  Etats  Generaux."  He  adds  later  on,  "Because  of  the 
immense  confusion  that  the  war  with  the  English  caused  in  the 
kingdom,  overthrowing  all  of  its  ancient  institutions,  and  because 
of  the  great  difficulty  of  convening  large  assemblies  as  everybody  was 
anxious  to  look  out  for  his  own  safety  rather  than  to  uphold  the 
public  cause,  there  were  no  real  Etats  Generaux  assembled  after  that 
time.  The  right  to  impose  taxes  rested  in  the  discretion  of  the  sov- 
ereign without  being  subject  to  the  approval  of  the  people."    Abrege 

28 


CONTEST  OVER  CONTROL  OF  THE  PURSE 

Charles  V  in  1369,  the  Etats  Generaux  convened  only  on  the 
following  dates: 

141 2  at  the  Palace  of  St.  Paul  in  Paris  during  the  reign 

of  Charles  VI.i 
1420  in  Paris,  upon  convocation  by  Henry  IV,  king  of 

England. 
1422  at  Bourges,  upon  convocation  by  Charles  VH. 

1424  at  Selles-en-Berry  and  Puy-en-Velay. 

1425  at  Mehun-sur-Yevre. 
1428  at  Chinon. 

These  last  four  assemblies  held  under  Charles  VH  during  Frequent 
the  disasters  of  the  Hundred  Years'  War  v^ere  followed  until  unde"^* 
1435  by  assemblies  held  almost  annually;  they  strained  them-  Charles Vll 
selves  to  "serve  the  King  as  well  as  his  great  generals;  to 
the  one  as  well  as  to  the  other  France  owes  its  salvation."  ^ . 

In  1435  at  Tours,  under  Charles  VIII,  the  Etats  Generatix 
organized  the  system  of  subsidy  taxes  (ferme  des  aides) ; 
in  1439  at  Orleans,  also  under  Charles  VII,  the  Etats  Gene- 
raux organized  permanent  armies  and  granted  forever  the 
right  of  levying  the  villain  tax  (taille),  the  revenues  of  which 
were  to  cover  the  expenditures  for  the  gendarmerie.^ 

chronologique  de  I'Histoire  de  France,  by  Franqois  de  Mezeray,  His- 
toriographer of  France,  Amsterdam,  1712. 

^  Assemblies  of  notables  were  held  in  1380  at  Paris  and  in  1382  at 
Compiegne;  they  are  mentioned  by  certain  historians,  but  as  Picot 
says :  "These  two  assemblies  should  not  go  down  in  history  under  the 
name  of  Etats  Generaux.  The  part  they  played  is  just  as  obscure  as 
their  origin." 

2  "Royalty,  finding  itself  at  the  height  of  misfortune  and  deprived 
of  all  resources,  bethought  itself  of  the  Etats  Generaux  which  it  had 
dreaded  or  held  in  contempt  ever  since  the  ascension  of  Charles  V. 
Royalty  threw  itself  into  the  arms  of  the  deputies  with  the  ardor  of 
despair,  entrusting  to  them  the  destiny  of  France  and  begging  them 
humbly  to  aid  in  its  distress.  Nine  assemblies  answered  within  a 
few  years  to  these  supreme  appeals.  From  the  misery  which  over- 
whelmed the  people  resulted,  as  if  by  magic,  enormous  subsidies; 
they  were  offered,  collected  and  put  into  operation  by  an  outburst  of 
real  patriotism;  neither  the  waste  of  an  idle  and  contemptible  court, 
nor  the  poor  success  of  a  resistance  which  seemed  desperate  until 
Joan  of  Arc  appeared  on  the  scene,  was  able  to  chill  their  noble  con- 
fidence; Charles  VII  was  as  faithfully  served  by  his  Etats  Generaux 
as  by  his  generals;  and  to  the  one  as  well  as  to  the  other  France 
owes  its  salvation."    George  Picot.    Histoire  des  Etats  Generaux. 

^  "Charles  VII,"  says  Commines,  "upon  winning  the  point  as  to 
imposing  the  tax  (taille)   at  will  without  the  consent  of  the  Etats 

29 


THE  BUDGET 

Then  the  Etats  Generaux  met  infrequently  and  the  inter- 
vals between  them  are  sufficient  to  show  to  what  extent  the 
existence  of  the  entire  institution  became  precarious.  In 
1467  an  assembly  was  held  at  Tours  under  Louis  Xl";  in  1483, 
in  the  reign  of  Charles  VIII,  during  the  regency  of  Anne  de 
Beaujeu,  was  held  one  of  the  most  important  assemblies  which 
had  far-reaching  results;  another  assembly  convened  in  1506 
under  Louis  XII  at  Tours. 


Tenacity 
with   Which 
Nation  Held 
to  Represen- 
tative 
Control 


The  Last  Meeting  Before  the  Revolution:  Then  comes  an 
interval  of  fifty-three?  years  in  which  falls  the  entire  reign  of 
Francis  I  ^  in  1558;  under  Henry  II,  an  unimportant  as- 
sembly of  the  notables  took  place;  another  took  place  in  1560 
during  the  minority  of  Charles  IX  at  Orleans,  and  this  assem- 
bly was  presided  over  by  Chancellor  Michel  de  I'Hospital; 
another  assembly  took  place  in  1561  under  Charles  IX  at 
Pontoise;  in  1576  and  1588  assemblies  were  held  in  Blois 
under  Henry  III;  in  1593  in  Paris  the  States  of  the  League 
convened;  in  1596  an  assembly  of  notables  was  held  in  Rouen 
under  Henry  IV  and  Sully;  finally,  in  16 14,  in  Paris,  during 
the  minority  of  Louis  XIII,  the  last  meeting  of  the  Etats 
Generaux  prior  to  1789  was  held. 

Recapitiilating,  except  during  the  reigns  of  John  the  Good 
and  Charles  VII,  we  do  not  find  more  than  five  or  six  assem- 
blies on  the  average  in  every  century.  These  assemblies  were 
convened  without  any  regularity  whatever.  Moreover,  we 
must  omit  from  the  number  all  the  simple  assemblies  of  nota- 
bles which  unjustly  assumed  the  name  of  Etats  Generaux. 

From  this  it  appears  that  the  institution  as  such  was  inopera- 
tive, or  rather  say,  that  it  acted  without  authority;  this  is 
demonstrated  by  the  list  of  dates  as  given  above,  as  well  as 
by  the  countless  cases  where  royalty  imposed  and  levied  taxes 
on  the  basis  of  its_  own  authority.  Taking  it  in  all,  until 
1 79 1,  taxes  seldom  originated  by  approval  of  the  representa- 
tives of  the  country.     However,  notwithstanding  these  im- 

Generaux,  quickly  changed  his  attitude  toward  the  Etats  and  so  did 
his  successors,  thus  inflicting  on  his  kingdom  a  wound  which  was  to 
bleed  for  a  long  time." 

^  Sully  says  that:  "Francis  I  left  instructions  to  his  successors  no 
longer  to  obtain  the  approval  of  his  people  for  the  services  and 
assistance  he  might  require  from  them ;  he  instructed  them  to  demand 
those  services  and  assistance  on  the  basis  of  the  power  and  royal 
authority,  without  stating  any  other  reason  than  the  will  of  the 
sovereign."    de  Sully.    Economics  royales. 

30 


CONTEST  OVER  CONTROL  OF  THE  PURSE 

mense  intervals  of  time,  the  idea  that  every  tax  should  be 
approved  by  the  nation  persisted  in  France.  This  idea,  pro- 
claimed on  various  solemn  occasions  and  recognized  by  roy- 
alty itself,  constantly  dominated  the  spirit  of  the  people;  and 
although  it  was  seldom  realized  we  can  say  that  at  all  times 
it  formed  a  latent  basis  for  our  public  law.^J  Thus,  under 
Louis  XI,  at  the  same  time  that  the  institution  began  to  grow 
obsolete,  Philipj>e  de  Commines,  minister  and  confident  of  the 
King,  wrote  the  following  celebrated  lines :  "Is  there  any 
king  or  lord  on  earth  who  has  the  power  to  impose  a  tax 
upon  his  subjects  without  the  consent  of  those  who  must  pay 
the  tax,  unless  he  does  it  through  tyranny  and  violence?" 

The  minutes  of  the  Etats  Gcncraux  are  filled  with  analogous 
declarations,  which  royalty  never  even  thought  of  contesting. 
In  1483  the  Etats  Generaiix  solemnly  declared:  "They  under- 
stand that  henceforth  no  tax  shall  be  imposed  on  the  people 
without  convening  the  Etats  Gcncraux  and  without  having 
obtained  their  consent  in  conformity  with  the  liberties  and 
privileges  of  the  kingdom."  There  were,  therefore,  liberties 
and  privileges  in  the  kingdom  which,  without  having  been 
registered  in  any  constitution,  were,  nevertheless,  recognized 
and  referred  to  as  basic. 

The  regent,  Anne  de  Beaujeu,  in  the  name  of  the  King,  Recognition 
Charles  VIII,  had  to  bow  before  the  prerogative  of  the  people  principle 
and  pledged  herself  in  conformity  with  the  demands  of  the 
Etats  Gcneraux  to  convene  them  within  two  years  at  the 
latest  in  order  to  obtain  the  renewal  of  the  temporary  approval 
of  the  taxes  which  had  l>een  voted.  However,  as  soon  as 
the  deputies  returned  to  their  provinces,  the  Crown  forgot 
completely  about  its  promises.  After  the  two  sacred  years 
had  elapsed,  the  regent  confined  herself  to  demanding  from 
the  Parlement  of  Paris  authority  to  continue  the  levying  of 
taxes;  so  the  next  assembly  of  the  Etats  Generaiix  did  not 
take  place  until  twenty  years  later. 

^  "The  power  of  the  Etats  Generaux  with  regard  to  the  vote  on 
taxes  was  very  often  not  appreciated;  but  still  this  power  remained 
engraved  in  the  conscience  of  the  public.  No  tax,  it  was  said,  could 
be  imposed  on  the  people  without  the  consent  of  the  Etats  Generaux. 
In' every  century  we  find  a  new  confirmation  of  this  fundamental  prin- 
ciple. The  deputies  themselves  did  not  want  to  admit  that  this 
principle  was  constantly  violated;  quite  to  the  contrary,  they  think 
that  this  power  was  always  in  force  and  that  it  did  not  become 
obsolete  until  of  late."    Georges  Picot.    Histoire  des  Etats  Generaux. 

31 


THE  BUDGET 

When  Henry  IV  appeared  before  the  Etats  Generaiix  at 
Rouen  in  1596,  he  made  them  the  following  celebrated  speech : 

"I  come  to  ask  your  advice,  to  trust  and  to  follow  it, 
and  I  give  myself  into  your  guardianship.  This  spirit  is 
not  generally  to  be  found  among  kings,  gray-beards,  and 
victors,  but  my  love  for  my  subjects  makes  me  consider 
everything  possible  and  honorable." 

In  spite  of  this  declaration,  however,  Henry  IV  and  Sully 
(who  in  his  Economies  royales  affirms  the  rights  of  the  na- 
tion) convened  the  Etats  Generaux  only  once,  and  that  very 
tardily  and  very  improperly.  Following  the  example  of  their 
predecessors,  they  only  proclaimed  the  principle  and  abstained 
as  much  as  possible  from  putting  this  principle  into  practice. 

Even  under  Louis  XIV,  Fenelon  in  his  Examen  de  con- 
science does  not  hesitate  to  remind  the  Dauphin  that  "In 
former  times  the  king  never  exacted  anything  from  his  peo- 
ple on  the  basis  of  his  authority  alone.  It  was  the  assembly 
of  the  nation  which  granted  him  the  funds  necessary  to  cover 
the  extraordinary  needs  of  the  state." 

It  is  possible  that  in  the  eighteenth  century,  on  account  of 
not  being  practiced,  this  principle  seems  to  have  vanished  from 
the  minds  of  certain  individuals.  Voltaire  attached  no  im- 
portance to  it  at  all,^  and  the  School  of  Economists  expressed 
strange  theories  in  support   of   absolute  power. ^    Rousseau, 

^  Voltaire  in  his  Histoire  du  Steele  de  Louis  XIV  is  silent  on 
the  subject  of  the  non-convening  of  the  Etats  Generaux.  Even  in 
Chapter  XXIX,  which  deals  with  the  internal  administration,  and 
where  the  subject  in  question  would  naturally  have  risen,  the  great 
philosopher  abstains  from  mentioning  one  of  the  worst  abuses  of 
the  regime  which  he  glorified. 

^Du  Pont  de  Nemours  says:  "What  is  called  legislative  power 
rests  exclusively  with  the  sovereign,  because  executive  power  by  vir- 
tue of  sovereignty  itself,  rests  exclusively  with  the  sovereign." 
Origine  et  progrks  d'une  science  nouvelle.  Mercier  de  la  Riviere  says : 
"The  tax  is  the  result  of  joint  property  interest  acquired  by  the  sov- 
ereign on  the  net  products  of  the  soil  under  his  domination."  Ordre 
naturel  et  essentiel  des  Societes.  "The  idea  of  establishing  forces  to 
counteract  the  arbitrary  abuses  of  the  authority  of  a  sovereign  is 
evidently  a  chimera." — Idem. 

L'Abbe  Bandeau  speaks  also  of  the  expenditures  of  a  sovereign, 
of  the  revenues  of  a  sovereign,  of  the  property  of  a  sovereign  with- 
out ever  mentioning  the  rights  of  the  nation.  Du  Pont  de  Nemours 
in  his  correspondence  at  the  end  of  his  life  with  J.-B.  Say,  says:    "It 

32 


CONTEST  OVER  CONTROL  OF  THE  PURSE 

Condorcet,   David   Hume,    Boulainvilliers  and   Montesquieu, 
however,  considered  the  right  of  the  nation  to  authorize  pub-\'^ 
lie  revenues  and   expenditures  as   a   fundamental  principle.  I 
We  can,   therefore,   safely  state  that  the  tradition  on  this" 
subject  remained  uninterrupted,   and   that  the  principle,   as 
such,  was  also  proclaimed  and  only  the  application  of  the 
principle  failed. 

In  order  to  explain  this  contradiction  between  the  theory 
and  the  facts  and  at  the  same  time  to  excuse  the  flagrant  vio- 
lations of  the  public  law  committed  by  royalty  and  which 
royalty  did  not  even  defend,  it  has  been  alleged  that  the  Etats 
Generaux  were  incapable  of  performing  their  constitutional 
functions. 

Bailly*s  statement  in  his  Histoire  Unancieres  is  certainly 
true:  "The  Etats  Generaux  in  France  convened  once  in  a 
great  while,  and  composed  as  they  were  of  individuals  not 
acquainted  with  public  affairs  and  not  having  the  time  to 

is  a  narrow  and  capricious  idea  of  the  English  that  it  is  necessary  to 
regulate  every  year  the  amount  to  be' granted  to  the  government  and 
to  reserve  for  oneself  the  right  to  refuse  the  tax." 

The  Marquis  de  Mirabeau,  in  his  Theorie  de  Vimpot,  after  having 
said  that  "The  opinion  that  princes  are  permitted  to  impose  their  will  . 
upon  their  subjects  is  an  absurd  and  impious  flattery,"  adds  at  the 
same  time:  "You  are  not  going  to  accuse  me,  sir,  of  an  intention 
to  deduce  from  this  that  the  formal  consent  of  the  people  pro- 
nounced by  its  assembled  representatives  should  be  necessary  to  give 
legal  authority  to  every  fiscal  decreed  God  forbid !  Quite  to  the 
contrary,  it  will  be  shown  below  that  I  am  putting  in  the  hands  of  the 
princes  the  account  and  the  balance  of  revenues  of  their  subjects. 
Far  be  from  me  the  intention  to  restrict  the  authority  of  the  Mon- 
arch."   The  Marquis  did  not  escape,  however,  a  lettre  de  cachet. 

There  is  no  doubt  that  the  word  sovereign  which  is  habitually  used 
by  the  Economists  can,  strictly  speaking,  be  taken  in  its  abstract  sense 
and  can  be  applied  to  the  nation  as  well  as  to  the  king,  but  as  Mercier 
de  la  Riviere  painstakingly  informs  us  that  the  sovereign  should  not 
hold  his  power  by  force  of  election  but  that  his  power  should  be 
hereditary,  that  his  interest  may  at  times  appear  to  be  in  conflict  with 
the  interests  of  the  nation,  that  he  has  joint  possession  of  the  sub- 
stance of  his  subjects,  etc.,  the  personality  of  the  king  seems  to  be 
pretty  well  specified.  Besides  the  system  of  counteracting  forces, 
that  is,  the  parliamentary  system  of  government,  is  formally  con- 
demned by  this  School. 

M.  G.  Schelle,  however,  whose  works  should  always  be  consulted 
when  speaking  of  the  Economists,  states  that :  "Du  Pont  de  Nemours 
did  not  share  the  reactionary  ideas  on  legal  despotism  and  that  in  all 
cases  Turgot  has  openly  seceded  from  his  friends  on  that  subject."  G. 
Schelle.    Du  Pont  de  Nemours  et  VEcole  physiocratique,  Paris,  1888. 

33 


THE  BUDGET 


Efforts  to 
Usurp  Func- 
tions of 
Executive 


gain  any  experience,  they  did  not  know  how  to  specify  or 
how  to  carry  out  their  rights." 

We  have  seen  that  in  England  the  Commons  were  much 
more  clear-sighted  and  firm.^  In  France  the  Etats  Generaiix 
should  have  confined  themselves  to  claiming  the  vote  of  the 
budget.^  This  was  exactly  the  object  of  their  being  assem- 
bled; and  this  should  always  have  been  the  special  object  of 
their  demands.  But  instead  of  taking  this  ground  from  which 
they  could  not  have  been  driven,  they  attempted  to  encroach 
upon  the  administrative  powers  of  the  Crown  and  to  substi- 
tute themselves  for  the  latter  in  the  management  of  public 
affairs.  It  seemed  to  them  that  to  rule  personally  consti- 
tuted the  only  effective  way  of  maintaining  control  over  the 
purse  or  the  budget  prerogative.  In  1596,  at  Rouen,  they 
demanded  that  a  permanent  delegation  taken  from  their 
midst  should  share  with  royalty  the  functions  of  administra- 
tion. Henry  IV  was  clever  enough  to  appear  to  yield  to  their 
demands  by  establishing  jointly  with  their  members  a  conseil 
de  raison,  which,  however,  at  the  end  of  a  few  months  had 
to  be  dissolved  because  of  lack  of  power  and  discord  among 
the  members. 


Not  Con- 
vened After 
1614 


A  Lapse  of  One  Hundred  and  Seventy-five  Years:  In 
1614,  at  the  last  Etats  Generaux  convened  prior  to  1789,  the 
Cahiers  which  were  submitted  to  the  Crown  by  the  "Third 
Estate"  contained  so  many  demands  that  the  examination  of 
these  demands  alone  would  have  required  several  months,  and 
their  realization  would  have  upset  the  institutions  of  the  coun- 

1  "From  the  end  of  the  thirteenth  century  until  now  everything  in 
France  contributed  toward  the  triumph  of  the  rnonarchical  system, 
and  in  England  toward  the  triumph  of  the  parliamentary  form  of 
government."  Guizot.  De  Vorigine  du  systbme  representatif  en 
Angle  terre. 

2  Voltaire,  in  his  Essai  siir  Ics  mceurs,  traces  back  the  history  of 
the  Etats  Generaux  and  analyzes  the  causes  of  their  failure.  "The 
little  experience  that  the  nation  had  in  examining  its  needs,  its  re- 
sources and  its  powers,  has  always  made  the  Etats  Generaux  destitute 
of  that  steadiness  of  mind  and  of  the  knowledge  of  their  own  business 
which  can  be  observed  in  all  regulated  corporations.  Convened  at 
long  intervals,  they  asked  for  laws  and  customs  instead  of  making 
them.  They  were  wondering  all  the  time  and  uncertain."  Further 
on  he  adds :  "These  Etats  Generaux,  assembled  hastily,  did  not  have 
any  stock  of  laws  nor  any  traditions  such  as  the  Parliament  of  Eng- 
land. They  did  not  form  a  usual  part  of  the  supreme  legislature." 
Voltaire.    Essai  sur  les  mocurs  et  V esprit  de'  nations. 

34 


CONTEST  OVER  CONTROL  OF  THE  PURSE 

try  from  top  to  bottom.  ''These  assemblies,  convened  at  such 
long  intervals,"  says  Henry  Martin,  "brought  with  them  the 
cumulated  complaints  of  an  entire  generation."  It  was,  how- 
ever, great  folly  to  furnish  the  Crown  with  pretexts  for  de- 
lays, of  which  the  Crown  availed  itself  by  not  convening  them 
for  175  years. 

Evidently  Royalty  was  better  organized  and  had  more  Cataclysm 
powerful  weapons  than  the  Etats  Generaiix.  Seeing  that  they  J."  ^^^^ 
were  tmcertain  as  to  what  direction  to  take,  watching  their 
false  maneuvers,  and  profiting  by  their  unsuccessful  attempts 
— Royalty  was  triumphant  in  all  struggles.  But  this  easy 
victory  over  the  national  representatives  became  the  cause  of 
a  great  national  cataclysm.  De  Tocqueville  deplores  this 
victory  in  the  following  teniis : 

"I  venture  fo  say  that  from  the  day  when  the  nation 
(tired  of  the  long  struggles  which  accompanied  the  cap- 
tivity of  King  John,  and  the  insanity  of  Charles  VI)  per- 
mitted the  kings  to  impose  taxes  without  its  cooperation ; 
and  from  the  day  when  the  nobility  was  base  enough  to 
allow  the  taxing  of  the  third  estate  on  the  condition  that 
they  themselves  be  exempted — from  that  day  were  scat- 
tered the  seeds  of  all  the  vices  and  of  almost  all  of  the 
abuses  which  undermined  the  ancient  regime  and  finally 
wrought  its  violent  dissolution." 

The  Period  of  the  ''Parlements":  From  161 4  on,  as  we 
have  stated,  the  Etats  Generaux  ceased  to  be  convened.  Until 
1789,  or  for  175  years,  the  Crown  governed  alone;  imposed 
taxes  and  regulated  expenditures  at  will  without  the  co- 
operation of  the  representatives  of  the  country.  From  then 
on  the  absolute  power  of  the  king  was  to  be  opposed  by  the 
Parlemcnts. 

5'-' 

"Parlemcnts"  not  Representative:  The  Parlement  at- 
tempted, in  fact,  to  arrogate  to  itself  the  right  to  control  the 
purse  of  which  the  representatives  of  the  country  had  been 
deprived.  But  this  effort  could  be  nothing  more  than  a  sham 
because  the  Parlement  which  neither  the  people  nor  any  part 
of  the  nation  elected  did  not  represent  anybody.  Their  office, 
acquired    by    purchase,^    conferred    on    them    no    legislative 

^  "It  will  undoubtedly  appear  strange  for  one  to  become  the  repre- 
sentative of  a  nation,  dispenser  of  justice  and  defender  of  the  people, 

35 


THE  BUDGET 

powers.  Montesquieu  said  of  them:  "The  Parlement  pub- 
lishes the  laws  after  the  laws  are  passed,  and  reminds  the 
people  of  the  laws  when  they  have  been  forgotten."  The 
publication  of  the  laws  by  the  Parlement  was  simply  a  for- 
mality; it  involved  no  right,  no  power  to  ratify  the  laws  of 
the  country,  much  less  those  dealing  with  taxes.  And  what 
value  could  lie  in  a  legislative  right,  if  it  existed,  when  a  Lit 
de  Justice  was  sufficient  to  permit  the  king — who  was  re- 
ceived with  much  pomp  and  seated  on  an  elevated  throne — to 
order  forthwith  the  registration  of  edicts? 
Were  The  minutes  of  these  Lits  de  Jtistice  are  remarkable  for 

Entirely  ^-j^g  puerility  of   the  very  ceremonial   which  they  describe, 

to"  the' King  The  Keeper  of  the  Seals  advanced  toward  the  king,  and  then, 
after  having  knelt  down  to  receive  his  orders,  he  resumed 
his  seat,  replaced  his  headgear,  and  declared  that  the  king 
now  permits  the  session  to  open.  With  his  authorization, 
the  privilege  of  the  floor  was  then  given  to  the  first  president, 
who,  before  beginning  his  speech,  knelt  down  in  turn  with  all 
the  Messieurs  and  arose  only  upon  receiving  a  command  to 
do  so.  The  Advocate  General  who  succeeded  the  first  presi- 
dent observed  the  same  formality.  When  these  two  speeches 
were  finished,  the  Keeper  of  the  Seals  again  knelt,  then  rising, 
he  descended  from  the  platform,  returned  to  his  seat,  and, 
replacing  his  headgear,  simply  pronounced :  "The  King  from 
his  Lit  de  Justice  has  ordained  and  hereby  ordains  that  the 
edict  just  read  shall  be  inscribed  on  the  records  of  his  Parle- 
ment/' The  king  then  spoke  as  follows:  "You  have  just 
heard  my  will ;  I  expect  you  to  comply  with  it.  Whereupon," 
continued  the  minutes,  "the  King  arose  and  left  in  the  same 
order  as  he  had  entered."  ^  Thus  the  entire  procedure  was 
ended.  The  records  of  the  Parlement  merely  mention  that 
the  registration  took  place  by  virtue  of  "a  very  explicit  order 
of  our  Lord  and  Master." 
Illustration  Thus  Louis  XIV — ^hardly  seven  years  old  and  led  by  the 
sequfous^Ms  ^^"^  *^  *^^  Parlement  and  just  able  to  remember  and  to  pro- 
nounce intelligently  the  sacrosanct  formula — ^had  edicts,  im- 
posing extraordinary  taxes  ratified  ^    (September  7,   1645). 

after  having  purchased  an  office  with  the  consent  of  the  King."  Senac 
de  Meilhan.  Le  Gouvernement  les  Maeurs  et  les  Conditions  en  France 
avant  la  Revolution,  1795. 

1  The  Minutes  cited  are  those  o.f  the  Lit  de  Justice  held  at  the 
palace  of  Versailles  on  Monday,  Aug.  6,  1787. 

2  "xhe  Ministry  conceived  new  fiscal  edicts  imposing  extraordinary 

36 


CONTEST  OVER  CONTROL  OF  THE  PURSE 

Absohitism  Unchecked:  In  1655,  the  Parlement  having 
resolved  to  protest  against  the  edicts  on  stamps  and  coin,  the 
King,  now  grown  to  manhood,  left  Vincennes  on  horseback 
and  entered  the  assembly  room  in  his  riding  boots  and  with 
his  horsewhip  in  hand  ^  and  said  to  the  first  president :  "The 
misfortunes  which  have  been  caused  by  your  assemblies  are 
known.  My  order  is  to  discontinue  the  assemblies  which 
have  l3een  begun  on  the  subject  of  my  edicts."  Everybody 
was  silent  and  obeyed,  and  the  royal  authority  was  not  again 
contested  during  this  reign.  Voltaire.  Historic  du  Parle- 
ment de  Paris. 

Thus,  during  the  entire  reign  of  Louis  XIV,  no  check, 
not  even  an  apparent  one,  was  applied  to  the  absolute  power 
of  the  King.    The  Etats  Generaux  were  discontinued  and  the 
Parlements  silenced.    The  latter  did  not  regain  the  possession 
of  their  ancient  right  of  protest  until  171 5,  from  which  date 
they  maintained  them  until  the  Revolution.     The  esprit  de 
corps  and  personal  interest  had  only  too  often  led  them  to  Parlement 
cast  their  votes  against  the  public  weal.     They  always  pas-  Be"al|f 
sionately  opposed  the  taxes  which  threatened  to  affect  their  Body  of 
own  interests,  but  they  showed  peculiar  forbearance  on  the  Protest 
score  of  the  villain  taxes  (tailles),  which  bore  only  upon  the     , 
non-privileged  classes  and  which  were  arbitrarily  levied  by 
warrant  each  year.     Necker  wrote  to  the  King  as  follows: 

"The  Parlements  are  opposing  a  just  assessment  of  the 
'twentieth'  tax,  which  would  at  once  reduce  their  personal 

taxes,  the  publication  of  which  covered  them  with  shame  and  ridicule. 
There  were  nineteen  edicts  of  that  kind.  Louis  XIV  was  brought  to 
the  Parlement  in  a  child's  clothing  in  order  to  register  these  shameful 
edicts.  He  was  seated  in  a  small  armchair  which  served  as  a  throne, 
having  at  his  right  hand  the  queen,  his  mother,  the  Duke  of  Orleans, 
his  uncle,  and  eight  dukes,  and  at  his  left  hand  three  cardinals.  He 
pronounced  the  following  words :  "My  affairs  bring  me  to  the  Parle- 
ment. The  Chancellor  is  going  to  explain  to  you  my  will."  Voltaire. 
His  to  ire  du  Parlement  de  Paris,  by  M.  I'abbe  Big.  .  .  . 

It  is  hard  to  imagine  anything  more  absurd  than  a  king  of  seven 
years  "acting  on  his  own  initiative  and  with  absolute  power"  and 
to  stammer  with  a  childish  voice  that  'his  Chancellor  would  explain 
his  will.'  " 

The  Parlement,  however,  chained  by  tradition  and  formality,  did 
not  dare  waive  this  ceremony.  Mathieu  Mole,  First  President,  and 
Omer  Talon,  Advocate  General,  had  to  pronounce  the  commonplace 
customary  speeches. 

^  It  seems  certain  that  the  King  did  not  have  a  whip  in  his  hand, 
but  that  he  was  wearing  his  riding  boots. 

37 


THE  BUDGET 

revenues.  They  show  more  zeal  in  their  opposition  to 
the  rights  of  control  over  the  purse  which  increase  the 
costs  of  justice  than  against  all  other  assessments  which 
fall  on  those  farther  removed  from  the  Palace." — Me- 
moire  sur  les  assemblies  provinciales,  addressed  to  the 
King,  1778. 

Convening  of  the  Etats  Generaux  Recommended:  After 
enjoying  popular  favor  for  a  century  and  a  half,  as  the  people 
had  for  a  long  time  maintained  this  last  barrier  against  the 
absolute  power  of  the  king,  it  was  the  Parlement  itself  which 
demanded  that  the  Etats  Generaux  be  convened.  During  its 
protests  against  the  edicts  on  the  stamp  tax  in  1787,  the  Parle- 
ment deemed  it  necessary  to  inquire  of  the  minister  of  the 
Etats  Generaux  about  the  revenues  and  expenditures  of  the 
kingdom,  and  one  of  its  junior  members  said :  "That's  it. 
What  we  want  are  the  Etats  Generaux/'  (C'est  cela.  II  nous 
faut  des  Etats  Generaux.)  This  remark  met  with  much  ap- 
proval,  because  the  idea  expressed  was  right.  Repeated  from 
mouth  to  mouth  it  became  the  slogan  of  the  entire  country, 
and  from  all  sides  rose  the  demand  for  the  convening  of  the 
Etats  Generaux. 

The  Parlement,  exiled  to  Troyes,  continued  its  deliberations 
and  again  resolved  that  "The  Etats  Generaux  alone  can  exam- 
ine and  heal  the  wounds  of  the  State  and  grant  taxes."  "The 
Courts,"  added  the  Parlement,  "never  had  the  right  to  impose 
or  to  approve  a  tax"  (August  17,  1788).  It  was  said  further 
on  that: 

"The  Parlement,  although  allowed  by  the  sovereign  to 
announce  the  latter's  will  to  the  people,  was  never  per- 
mitted by  the  sovereign  to  take  the  people's  place.  The 
king  certainly  is  not  ignorant  of  the  constitutional  prin- 
ciple that  taxes  shall  be  approved  by  those  who  have  to 
bear  the  burden,  and  that  it  is  not  in  the  heart  of  a  well- 
meaning  king  to  change  this  principle,  which  is  one  of 
the  fundamental  laws  of  the  State." 


Announces 
the  Right  of 
the  People 
to  Control 
the  Purse 


Thus,  after  having  proclaimed  itself  for  more  than  a  cen- 
tury the  only  guardian  of  political  liberties — and  after  having 
held  royalty  in  check,  as  if  it  were  really  representing  the 
country — the  Parlement  of  Paris,  in  1787,  suddenly  changed 
its  language,  disowned  its  past  and  itself  proclaimed  the  neces- 

.38 


CONTEST  OVER  CONTROL  OF  THE  PURSE 

sity  of  convening  the  Etats  Generanx  prior  to  the  imposing  of 
any  new  tax.  The  Cour  des  Aides,  the  chamber  of  accounts, 
all  the  courts  having  jurisdiction  in  these  matters,  the  Parle- 
ments  of  Rennes,  Rouen,  Grenoble,  Toulouse,  Besangon,  etc., 
repeated,  vying  with  each  other,  that  "it  would  mean  the  abo- 
lition of  the  sacred  and  unimpairable  right  of  the  nation  to 
consent  to  the  imposition  of  such  taxes  as  the  nation  itself 
would  not  have  granted."  This  shows  that  the  rights  of  the 
nation  were  really  indestructible,  since  they  survived  so  long 
a  period  of  disuse. 

Establishment   of  the  Modern  Budgetary  System  in 

France 

">, 
The  budgetary  activities  of  the  old  Etats  Generaux  were  Right  of 
concerned  almost  exclusively  with  the  voting  of  subsidies :  "No  Popular 
tax  whatever  can  be  levied  without  the  consent  of  the  nation."  overThe 
This  was  the  only  requirement  of  the  budget  law  until  1789.  Purse 
This  requirement  was  unanimously  confirmed  by  the  editors  Demanded 
of  the  Cahicrs  at  the  senechal's  court  and  bailiwicks,  who  also 
declared  that  '*no  tax  can  be  levied  without  the  authorization 
of  the  nation."     This  formulation  of  principle  can  be  found 
everywhere,  from  one  end  of  France  to  the  other,  expressed 
in  formal,  almost  identical  terms. 

Rights  of  Representatives  of  the  Nation  to  Control  Reve- 
nues First  Recognised:  Entertaining  these  ideas,  the  Na- 
tional Assembly  immediately  on  convening  promulgated  a  law 
in  clear  and  definite  language  (Decree  of  June  17,  17^9) y 
declaring  that  henceforth  the  right  to  vote  a  tax  shall  be  Under  the 
vested  exclusively  in  the  representatives  of  the  nation.  Dating  ^^^  °^  '789 
from  this  time,  this  principle  can  be  found  in  all  our  constitu- 
tions, and  very  few  infractions  of  it  have  been  committed. 
We  say  very  few,  because,  unfortunately,  several  cases  of 
infraction  can  be  found  in  the  annals  of  our  times,  which  on 
account  of  their  rarity  we  shall  enumerate. 

Thus,  during  the  First  Empire  the  tax  on  salt  originated  Infractions 
not  in  a  law  but  in  two  decrees  of  the  i6th  and  27th  of  March,  ^if^^p^i^J^^^ 
1806.  However,  on  April  24,  1806,  a  law  gave  this  tax  a 
legal  basis.  In  18 10,  a  simple  decision  of  the  Government 
definitely  established  the  monopoly  on  tobacco  (Decree  of 
December  29,  1810).  In  181 3  and  18 14,  the  Emperor  on 
his  own  authority    (Decree,    November    11,    181 3)    imposed 

39 


THE  BUDGET 

'  thirty  centimes  additionel  to  the  principal  of  the  taxes  on  land, 

doors  and  windows  and  personal  property,  plus  an  additional 
two-tenths  of  a  franc  on  salt,  and  one-tenth  of  a  franc  on  all 
indirect  taxes  and  tolls.  The  decree  of  January  9,  18 14,  pub- 
lished under  similar  conditions,  fixed  the  budget  for  18 14  and 
in  this  doubled  the  property  tax  and  the  door  and  window  tax 
and  increased  to  fifty  the  centimes  additionel  to  the  land 
tax. 
This  Helped  It  is  quite  evident  that  Napoleon — returning  to  Paris  after 
thfrrench^  the  battle  of  Leipsic,  in  sore  need  of  funds  and  under  the  men- 
People  ace  of  invasion — ^might  be  excused  for  having  anticipated  the 
action  of  the  Chamber  of  Deputies.  The  idea  of  control  over 
the  purse  by  elected  representatives  (the  budget  prerogative) 
— particularly  so  far  as  tax  matters  were  concerned — had 
become  so  deeply  rooted  in  the  hearts  of  the  people  that  even 
the  declaration  of  dethronement  gravely  reproached  the  for- 
mer Emperor  for  this  infraction: 

"It  is  a  fact,"  says  the  Senate,  on  April  3,  181 4,  "that 
Napoleon  has  torn  to  pieces  the  covenant  which  united 
him  with  the  French  people  by  levying  taxes  and  impos- 
.  ing  them  in  other  ways  than  through  the  law  and  in  con- 
tradiction of  the  explicit  tenor  of  the  oath  he  took  when 
he  ascended  the  throne.  That  he  has  committed  this  in- 
fringement upon  the  rights  of  the  people  at  this  very  time 
when  he,  without  necessity,  adjourned  the  legislative 
body.  .  .  ." 

Two  Later  In  our  day,  the  levying  of  illegal  taxes  has  occurred  on 

Infractions  ^^^^  ^^^  exceptional  occasions.  In  1848,  when  the  Provi- 
sional Government — 'by  decree  of  March  26  and  without  wait- 
ing for  the  convening  of  the  Constitutional  Assembly  (which 
met  on  May  5  of  the  same  year) — added  forty-five  centimes 
to  the  land  tax;  then,  at  the  beginning  of  the  year  1852,  when 
the  Prince-President,  by  virtue  of  dictatorial  powers,  promul- 
\.  gated  the  general  budget  for  that  fiscal  year.  Since  1789, 
1  with  the  exceptions  noted,  the  principle  of  having  taxes  voted 
by  the  representatives  of  the  nation  has  been  respectfully  writ- 
ten into  the  text  of  constitutions  and  observed  in  the  prac- 
tice of  the  Government. 

Recognition  of  the  Right  to  Control  Expenditures  Comes 
Later:     With  regard  to  expenditures,  however,  the  situation 

40 


CONTEST  OVER  CONTROL  OF  THE  PURSE 


is  entirely  different.  The  study  of  the  foundation  of  the  mod- 
ern regime  demands  that  the  expenditures  be  considered  sepa- 
rately. The  old  Etats  Gencranx,  as  a  matter  of  fact,  had  very 
rarely  carried  their  inquiries  into  the  use  of  subsidies,  or,  in 
other  words,  as  far  as  the  expenditures;  and  if  they  went  so 
far  as  that  they  did  it  in  an  incomplete  and  timid  way,  as  if 
they  doubted  the  legitimacy  of  their  rights.  In  fact,  the 
deputies  of  1789  had  every  reason  to  ask  themselves — and  we 
shall  see  that  this  question  was  asked  at  the  time  of  the  Res-  Question 

^      ^  *  '    ^       .  1    ,  ,         Raised  as  to 

toration — whether  the  right  to  regulate  expenses  was  not  a  whether  it 
legitimate  royal  privilege  and  whether  the  Executive  should  Was  a  Rep- 
not  be  charged  with  regulating  and  disbursing  public  expendi-  pun"t^on^^ 
tures,  once  the  revenues  intended  to  meet  these  expenditures 
had  been  voted  by  the  nation.     In  any  case,  the  ideas  on  the 
subject  were  uncertain  and  obscure  because  they  had  not  be- 
come thoroughly  crystallized. 

Thus  the  Cahiers,  presented  by  bailiwicks  and  senechal 
court  districts — instead  of  the  unanimity  displayed  in  connec- 
tion with  the  vote  on  the  tax — contain  only  ambiguous  phrases, 
dubious  claims  and  confused  ideas  with  regard  to  expendi- 
tures.    A  few  illustrations  follow : 


"The  ministers  shall  be  responsible  to  the  nation  for  Demanded 
their  administration"  (Memoranda  of  the  Nobility  of  Account- 
Mirecourt) ;  "the  account  of  expenditures  shall  be  sub-  ability 
mitted  to  the  assembled  nation  and  for  every  district  or 
dcpartcmcnt  shall  be  appropriated  an  amount  of  money 
for  its  use,  and  the  ministers  and  their  subordinates  shall 
be  held  responsible  for  that  amount  in  such  a  way  that  an 
account  may  l)e  given  at  a  date  to  be  fixed  for  that  pur- 
pose" (Memoranda  of  the  Third  Estate  of  Montargis) ; 
"ministers  shall  be  held  accountable  for  the  public  funds 
they  use,  each  one  for  his  own  departemcnt"  ( Memoranda 
of  the  Clergy  of  Montreuil-sur-Mer)  ;  "the  expenditures 
necessary  for  the  general  administration  of  the  kingdom, 
particularly  of  the  different  dcpartcmcnts,  shall  be  ap- 
portioned according  to  estimates"  (Memoranda  of  the 
Third  Estate  of  the  Senechal's  Court,  District  of  Guy- 
enne) ;  "our  deputies  shall  apply  themselves  at  first  to  a 
careful  study  of  the  actual  condition  of  the  finances  and 
to  the  verification  and  auditing  of  the  expenditures  of  each 
dcpartcmcnt — ^all  audited  and  verified  statements  of  rev- 
enues and  expenditures  shall  be  made  public  in  print" 

41 


THE  BUDGET 

(Memoranda  of  the  People  of  the  Senechal's  Court,  Dis- 
trict of  Rennes). 


Technic  of 
Control  over 
^/    Expendi- 
tures Not 
Developed 


Expendi- 
tures of 
State  and 
Royal  House 
Confused 


The  above  are  the  most  significant  quotations  contained  in 
the  collection  of  memoranda  bearing  upon  the  control  of  pub- 
lic expenditures  by  the  representatives  of  the  country;  the 
most  of  these  Cahiers,  however,  are  silent  on  the  subject. 
Some  of  them  even  quite  openly  leave  the  matter  to  the  discre- 
tion of  the  sovereign :  "The  expenditures  of  the  various  de- 
part ements  shall  be  determined  and  decided  by  His  Majesty, 
the  nation  trusting  itself  with  confidence  to  His  Majesty's 
promises  with  regard  to  economies."  (Memoranda  of  the 
Third  Estate  of  the  Senechal's  Court,  District  of  Montpelier, 
Articles.) 

The  Constitutional  Assembly,  deprived  of  precedents,  re- 
vealed by  its  acts  the  indefiniteness  of  tlie  fundamental  ideas 
which  were  to  serve  as  guides.  The  Assembly  neither  knew 
how  to  construct  budgets,  nor  how  to  establish  a  regular  con- 
trol over  expenditures.  From  the  first,  the  Assembly  very 
correctly  separated  the  State  funds  from  the  funds  of  the 
Civil  List.  The  creation  of  a  Civil  List  became,  in  England 
as  well  as  in  France,  the  cornerstone  of  the  new  regime.^ 

Until  that  time  the  greatest  confusion  existed  between  pub- 
lic expenditures  and  expenditures  for  the  household  of  the 
king  and  queen.  This  is  frequently  shown  by  the  tables  at- 
tached to  the  accounts  prepared  by  Necker  and  Brienne  in 
1 78 1 -1 788.  These  tables  contain  subheadings  with  the  follow- 
ing titles:  expenditures  for  the  king's  table;  sundry  enter- 
tainments; furniture;  wearing  apparel;  horses;  hunting  out- 
fits, etc.  In  order  to  effect  economies,  Necker  abolished  by 
his  edicts  of  1780  a  number  of  ridiculous  offices  attached  to 
the  royal  household,  all  of  which  were  carried  on  the  budget 
of  the  State.  Some  of  these  offices  were  chef,  wine  steward, 
roast  turners,  etc.  The  term  Ciznl  List  was  so  little  applied 
in  France  prior  to  1789  that  the  dictionary  of  finance  of  the 
Encyclopedie  Methodique  limits  itself  to  the  following  defini- 
tion:   "Civil  List — a  term  used  in  the  finances  of  England." 

The  decree  of  October  7,  1789,  provided  that  "Each  legis- 
lature shall  appropriate  in  the  manner  it  deems  best,  the  funds 


^  On  the  subject  of  the  Civil  List  after  1789,  read:  Etudes  sur  la 
liste  civile  en  France,  by  Alphonse  Gautier.  Ancien  Conseiller  d'Etat, 
Paris,  1882. 

42 


CONTEST  OVER  CONTROL  OF  THE  PURSE 

intended  either  for  the  payment  of  the  interest  on  the  public 
debt  or  for  the  payment  of  the  Ciznl  List" 

The  decree  of  October  13,  1790,  again  declared  that  "the  Effort  Made 
department  of  the  royal  household  should  cease  to  be  a  part   iJture^to" 
of  the  public  treasury."     Finally,  the  constitution  of   1791    Invade  the 
provided  as  follows :  n!\t'^^'^ 

"Article  10 — The  nation  provides  for  the  magnificence 
of  the  throne  by  its  Civil  List  the  amount  of  which  is  de- 
termined by  the  legislative  body  at  the  time  of  the  acces- 
sion and  runs  for  the  entire  duration  of  the  incumbent's 
reign."     (September  3,  179 1.) 

With  this  exception,  no  permanent  laws,  dealing  with  pub- 
lic expenditures  at  all  analogous  to  fiscal  measures  of  which 
the  Constitutional  Assembly  can  justly  be  proud,  were  en- 
acted. The  Constitutional  Assembly  limited  itself  to  calcu- 
lating the  expenditures  in  proportion  to  the  needs ;  at  first,  for 
a  portion  of  the  year;  then,  for  three  months;  then,  for  one 
month,  and  finally,  from  one  day  to  another.  It  did  not  lay 
out  a  general  plan,  nor  did  it  establish  a  budgetary  system.^ 
The  titles  which  were  given  to  these  bills  of  expenditures  are 
sufficient  to  indicate  their  ephemeral  character,  such  as:  "Out- 
line of  revenues  and  expenditures  to  be  collected  and  made 
by  the  royal  Treasury  during  the  months  of  April  and  May, 
1790";  "Outline  of  revenues  and  expenditures  to  be  collected 
and  made  by  the  royal  Treasury  during  the  three  last  months 
of  the  year  1790 — both  ordinary  and  extraordinary";  "Plans 
of  decrees  submitted  to  the  National  Assembly  in  the  name 
of  the  committee  on  finances  and  of  the  Treasury  for  ex- 
traordinary revenues  and  expenditures  relating  to  the  needs 
of  the  public  Treasury"  (April  17,  1791). 

^  The  decree  of  February  18,  1792,  which  attempted  the  prepara- 
tion of  a  budget,  has  only  the  two  following  items:  282,700,000  livres 
for  the  various  branches  of  ministerial  services ;  302,000,000  livres  for 
the  debt,  ecclesiastical  salaries,  pensions,  etc.,  or  in  total,  584,700,000. 

Article  5  of  this  decree  adds:  "The  present  decree  on  the  total  of 
expenditures  for  the  current  year  shall  not  constitute  the  approval  of 
any  particular  item  of  the  said  expenditures ;  the  using  of  funds  can- 
not be  made  nor  passed  but  in  accordance  with  the  decree  issued  by 
the  assembly  or  to  be  issued  with  regard  to  every  item."  Thus  in 
accordance  with  the  fundamental  decree  of  1791  the  assembly  finally 
reserved  the  right  to  decide  and  to  authorize  each  month  upon  every 
request  and  on  every  occasion  the  expenditures  which  became  neces- 
sary, without  making  a  general  plan  or  a  budget  for  the  total  of 
expenditures. 

43 


THE  BUDGET 

Commenting,  Mirabeau  exclaimed:  "I  never  hear  any- 
thing but  that :  'We  have  only  so  much ;  v^e  must  have  more/  " 
When  the  assignats  came  into  use,  every  calculation,  every 
provision  for  the  future  and  in  a  w^ord,  every  idea  of  a  budget 
plan  disappeared.  What  was  the  use  of  bothering  about  a 
balance,  when  the  paper  revenues  would  most  assuredly  bal- 
ance the  expenditures?  Every  reason  for  making  a  budget 
was  therefore  lacking. 

Encroachment   of  Legislature  on  Powers   of  Executive: 
The  only  procedure  by  which  the  Constitutional  Assembly  as- 
serted its  rights  with  regard  to  public  expenditures,  following 
the  example  of  the  old  Etats  Generaux,  consisted  in  encroach- 
.       ing  upon  the  executive  power  by  concentrating  in  its  own 
f—- hands  the  direction  of  the  vouchering  and  payment  of  accounts. 
The  National  Assembly,  as  a  matter  of  fact,  turned  over  the 
control  of  the  Treasury  to  a  committee  directly  subordinate  to 
the  Assembly  and  thus  kept  in  its  own  hands  the  keys  to  the 
public  Treasury,  arrogating  to  itself  the  control  over  the  ac- 
countable officers.     "The  Assembly  shall  itself  definitely  ex- 
jealousy  and   amine  and  audit  the  accounts  of  the  nation."     (Decree  of 
Suspicion         September  17,  179 1.)     An  accounting  bureau,  like  the  com- 
Branches         mittee  on  the  Treasury,  placed  under  the  direction  and  orders 
of  the  Assembly,  was  charged  with  verifying  all  the  accounts 
[    and  with  submitting  to  the  Assembly  the  result  of  these  verifi- 
y  cations.^     The  suspicion  under  which  the  executive  authority 
labored  was  the  cause  of  many  encroachments  which  were 
detrimental  to  the  establishment  of  any  regular  administra- 
tive organization. 

"The  unanimous  vote  of  France  has  decided  the  ques- 
tion:    The  finances  must  be  placed  beyond  the  reach  of 

^  All  citizens  have  the  right  to  ascertain  for  themselves  or  through 
their  representatives  the  necessity  of  public  contributions,  have  the 
right  to  approve  them  of  their  free  will  and  to  follow  the  use  of  these 
public  contributions."  (Declaration  of  Human  Rights,  Article  14.) 
"To  follow  the  use,"  is  not  a  proper  term  and  is  too  general.  The 
Constitution  of  1791,  which  followed  the  Declaration  of  Human 
Rights,  has  without  a  doubt  attributed  to  the  legislative  body  the 
function  of  determining  the  expenditures  without  saying,  however, 
whether  this  determining  shall  be  made  in  advance,  or  be  concomitant 
or  after  the  expenditures  are  made.  The  more  explicit  law  of  June  3, 
1791,  relating  to  the  organization  of  the  legislative  body  (Articles  93 
and  96),  does  not  even  break  away  from  vague  expressions,  such  as 
"The  legislative  body  shall  determine  the  expenditures  of  the  ad- 
ministration."    (Article  93.) 

44 


Views 


CONTEST  OVER  CONTROL  OF  THE  PURSE 

the  Executive.  The  principle  would  be  violated  if  the 
administration  of  finances  was  left  with  the  Government," 
said  Roederer  in  the  name  of  the  committee  on  finance. 
(Session  of  December  20,  1790.)  The  same  speaker  in 
a  later  session  added:  ''The  administration  of  public 
finances  is  by  no  means  a  royal  function.  It  is,  on  the 
contrary,  a  function  reserved  for  a  special  administrative 
agency  under  the  immediate  supervision  of  the  legislative 
body.  The  public  funds  are  deposited  with  the  adminis- 
trators of  the  Treasury  as  a  protection  against  the  possi- 
bility of  arbitrary  use  by  the  executive  power.'*  (Septem- 
ber 28,  1791.) 

We  shall  pass  in  silence  the  periods  of  the  Convention 
and  the  Directory,  because  we  could  hardly  hope  to  find 
during  these  two  periods  wholesome  measures  of  control 
which  the  Constitutional  Assembly  failed  to  establish.^  The 
Consulate  and  the  Empire  devoted  still  less  energy  to  im- 
proving the  mechanism  of  national  representation.  Bona- 
parte did  not  respect  even  the  text  of  the  existing  constitu-  Napoleon's 
tions.^  The  report  of  J.-B.  Say,  submitted  to  the  Tribunal, 
with  regard  to  an  appropriation  of  300,000,000  francs  in  a 
lump  sum,  stated : 

"Until  now  only  temporary  lump  appropriations  were 
made,  because  events  have  made  it  almost  impossible  to 
determine  the  ordinary  expenditures.  Now,  once  more 
through  exceptional  and  temporary  events  the  elements 
of  a  detailed  estimate  cannot  be  brought  together.  But 
this  system  is  inconsistent  with  the  constitutional  regime, 
is  detrimental  to  the  credit  of  the  State  and  to  the  estab- 
lishment of  order  in  our  finances." 


^  The  Constitution  of  the  year  III  of  the  Republic  when  speaking 
of  the  expenditures  limits  itself  to  the  following:  "Article  308. — 
Detailed  accounts  of  expenditures  made  by  the  various  ministers, 
signed  and  certified  by  them,  shall  be  made  public  at  the  beginning  of 
each  year." 

^  "The  Constitution  of  the  year  VIII  of  the  Republic  repeated  the 
formulas  of  the  earlier  ones  and  added  the  following:  "Article  56. — 
One  of  the  ministers  shall  be  specially  charged  with  the  administra- 
tion of  the  Public  Treasury.  He  has  no  right  to  authorize  any  pay- 
ment except  by  virtue  of  a  law,  and  to  the  amount  of  funds  which 
the  law  has  appropriated  for  one  kind  of  expenditure." 

45 


Reaction 
aries 


^  rn 


THE  BUDGET 

The  First  Consul  had  this  report  withdrawn  and  it  was  not 
printed.    Later  a  notice  in  the  Monitenr  Officiel  of  December 
15,  1808,  clearly  shows  the  secondary  role  which  the  Emperor 
intended  the  legislative  body  should  play. 
Claims  of  On  the  subject  of  expenditures  the  Constitution  of  1814  has 

in  it  the  same  gaps  as  previous  charters.  This  one  was  even 
more  silent  on  the  subject,  as  it  abstained  from  mentioning 
public  expenditures  in  any  of  its  articles.^  Was  this  silence  the 
result  of  doubt  as  to  its  principles,  or  was  it  the  result  of  an 
intentional  reserve?  It  is  true  that  reactionary  spirits,  regret- 
ting the  passing  of  the  ancient  prerogatives  of  the  king,  inter- 
reted  these  principles  in  a  way  to  assert  that  the  Etats  Gene- 
raux  had  no  rights  other  than  to  vote  the  revenues.  They 
said  that  in  accordance  with  the  traditions  of  the  past  the 
free  disposal  of  funds  resulting  from  taxes — that  is  to  say, 
the  right  to  regulate  the  expenditures — rests  exclusively  with 
the  king. 

"In  going  over  the  monuments  of  our  public  legisla- 
tion, one  cannot  fail  to  observe  that  although  the  right 
to  grant  or  to  refuse  a  tax  seems  always  to  have  been  re- 
served for  the  people,  one  does  not  find  anywhere  the 
slightest  trace  or  the  slightest  indication  which  would 
support  the  people's  claim  of  right  to  examine,  to  con- 
trol, and  to  regulate  the  use  of  the  public  funds." — Report 
of  Count  Garnier,  submitted  to  the  Chamber  of  Pairs, 
April  27,  18 1 6,  on  the  subject  of  the  Budget  for  1816.^ 

^  This  silence  on  the  subject  of  expenditures  seems  the  more  inten- 
tional because  the  Charter  of  1814  managed  to  express  itself  most 
correctly  on  the  subject  of  revenues  by  saying:  "no  tax  shall  be  im- 
posed nor  levied  unless  it  shall  be  approved  by  the  two  Chambers  and 
sanctioned  by  the  King."     (Article  48.) 

2  Count  Garnier  continued  as  follows :  "When  our  Kings  demanded 
from  the  States  General  that  a  new  and  extra  tax  be  levied,  this 
demand  was  summarily  based  on  some  fact  well  known  to  the  people, 
such  as,  for  instance,  the  payment  of  the  ransom  for  a  king  held 
prisoner,  an  expensive  war  which  had  to  be  continued,  or  large  debts 
which  had  to  be  paid.  The  approval  of  the  tax  necessarily  involved 
the  free  disposal  of  the  funds  which  the  tax  yielded.  This  part  of 
the  administration  was  left  to  the  high  wisdom  of  the  monarch  with- 
out any  guarantee  other  than  the  great  confidence  which  was  extended 
to  the  hereditary  sovereign." 

Ganilh,  an  Economist  and  a  deputy,  in  a  pamphlet,  replied  to  this 
theory  as  follows:  "There  is  no  longer  any  possibility  of  cover- 
ing the  public  expenditures  but  by  taxes  assessed  upon  personal 
property.    Why  should  the  Chamber  of  Deputies  or  the  representatives 

46 


CONTEST  OVER  CONTROL  OF  THE  PURSE 


Thus  the  right  which  the  assemblies  of  the  Revolution  failed 
to  proclaim  explicitly  and  to  organize  practically,  becomes  lost 
to  sight  at  the  beginning  of  the  Restoration,  when  even  the 
principle  itself  was  contested.  It,  therefore,  became  neces- 
sary to  reassert  it. 

"The  right  to  vote  the  tax  freely,''  says  the  report  to 
the  Chamber  of  Deputies  on  the  budget  for  1817,  "is 
unquestionably  the  most  important  of  your  attributes. 
But  what  is  the  extent  of  this  right,  and  within  what  limits 
shall  this  right  be  restricted?  Shall  you  have  only  the 
right  to  vote  or  refuse  a  tax  without  having  the  right  to  Right  to 
verify  and  determine  the  expenditures  and  to  supervise  ^eeds^  *"*** 

the  use  of  the  public  funds  ?"  Claimed  as 

Essential 

This  question  was  answered,  owing  to  the  fact  that  the  ^^^^  ^^ 
Constitution  had  remained  silent  on  the  subject,  by  the  rea-  of° Purse 
soning  of  Roy,  the  author  of  this  report: 

"Taxes  and  subsidies  are  levied  only  to  meet  the  needs 
of  the  State  and  its  indispensable  necessities.  The  im- 
mediate consequence  of  this  principle  is  that  the  authority 
which  has  the  right  to  vote  a  tax,  necessarily  has  also 
the  right  to  inquire  whether  this  tax  is  required  by  the 
necessities  of  the  State,  the  right  to  verify  these  necessi- 
ties, to  supervise  the  use  of  the  funds,  and  to  satisfy  itself 
that  the  funds  have  not  been  diverted  from  the  purpose 
for  which  they  were  exclusively  appropriated.  .  .  .  We 
should  not  have  raised  this  question,"  adds  Roy,  "if  at  the 
last  session  of  the  Chambers  it  had  not  been  taken  up  and 
discussed  in  the  Chambre  des  Pairs  in  a  report  carrying 
the  doctrines  which  we  deemed  it  necessary  to  combat." 

The  report  of  the  Chamber  of  Deputies  affirms  only  by 
induction  the  rights  of  the  legislature  in  matters  of  expendi- 
tures :  this  right  follows  as  a  corollary  to  the  right  of  voting 
the  tax.  In  spite  of  this  roundabout  method  the  practical 
conclusion  comes  straight  to  the  point: 

"Your  commission  unanimously  thought  that  examin- 
ing the  needs  and  the  expenditures  was  its  first  duty,  and 

of  property  owners  pass  without  examination  and  without  control  the 
expenditures,  which  tlje  property  has  to  pay?"  Ganilh.  Des  Droits 
constitutionels  de  la  Chambre  des  deputes  en  matiere  de  finances, 
1816. 

47 


THE  BUDGET 

in  order  to  give  force  to  this  view,  your  commission 
adopted  the  rule  that  two  separate  and  distinct  reports  be 
made  to  you ;  one  on  the  expenditures  and  the  needs,  and 
the  other  on  the  ways  and  means  of  meeting  them."  (Re- 
port, January  14,  18 17,  by  Deputy  Roy.) 

Roy  was  charged  with  making  the  report  on  revenues; 
Beugnot  was  charged  with  making  the  report  on  expendi- 
tures. This  duahsm  which  we  have  seen  on  different  occa- 
sions, growing  out  of  expediency,  had  at  bottom  a  deeper 
significance :  through  estabHshing  this  duahsm  the  chaml3ers 
of  the  Restoration  affirmed  their  right  to  vote  on  the  expendi- 
tures as  well  as  on  the  revenues.^ 

-^.  The  law  itself  was  not  long  in  sanctioning  the  real  powers 
of  the  legislature:  "The  expenditure  of  each  minister,"  the 
law  declared,  "shall  thenceforth  not  exceed  the  total  of  the 
appropriation  accorded  to  him.  They  shall  not  have  the  power 
to  exceed  their  appropriation  without  being  responsible  for 
it."  Thus  Article  151  of  the  law  of  March  25,  18 17,  not 
only  gives  to  the  legislature  the  power  of  assigning  the  neces- 
sary appropriations  to  the  various  branches  of  public  service, 
but  it  also  specifies  how  funds  shall  l^e  distributed  among  the 
various  ministries. 

Reconcilement  of  Right  of  Control  zvith  the  Principle  of 
Executive  Leadership:  Even  after  the  law  of  181 7  was 
passed,  discussions  of  the  principle  of  the  rights  of  repre- 
sentatives of  the  country  continued.  It  is  interesting  to  note 
in  this  connection  that  Roy,  having  been  appointed  Minister 
of  Finance,  uttered  aphorisms  similar  to  those  he  had  so 
well  combated  as  deputy  in  181 7: 

"The  Chamber  votes  a  tax,"  he  said,  "but  the  king  is 
the  supreme  chief  of  the  State.  With  him  alone  rests 
the  executive  power.  The  necessary  consequence  of  the 
operation  of  this  fundamental  principle  is  that  the  king 
has  the  right  to  apply  the  revenue  to  the  expenditures.    In 

^  After  the  beginning  of  the  Restoration  and  in  spite  of  the  Charter 
being  silent  on  the  subject,  the  deputies  voted  the  budget  of  expen- 
ditures. Their  vote,  however,  applied  only  to  the  total  appropriations 
which  were  put  at  the  disposal  of  the  Government  in  a  lump  sum; 
detailed  specifications  were  contained  in  the  budget  bill  only  as  ref- 
erence and  information.  See  Chapter  XIII  oil  the  subject  of  Speci- 
fication of  Legislative  Votes. 

48 


CONTEST  OVER  CONTROL  OF  THE  PURSE 

him  centers  the  executive  authority,  and  it  is  only  by  the 
exercise  of  that  authority  that  funds  voted  may  be  ap- 
plied to  the  purposes  they  are  to  serve."  (Speech  of  Roy, 
Minister  of  Finance,  June  30,  1820.) 

At  the  same  time  an  official  pamphlet,  rather  v^idely  dis- 
tributed, developed  the  ideas  of  the  Minister  by  supporting 
his  conclusions  with  the  maxims  of  feudal  monarchies  and 
the  practices  of  the  old  Etats  Generaux. 

The  Marquis  de  Garnier,  hovv^ever,  taking  advantage  of  the 
bill,  which  provided  for  showing  the  costs  of  collections  of 
revenues  and  expenditures,  obstinately  renewed  his  ancient 
theories:  "The  Chambers  have  the  right  to  vote  and  to  ap- 
prove the  taxes,"  he  said,  "but  with  the  king  rests  the  right 
to  regulate  them  as  he  deems  most  economical  and  most  con- 
venient .  .  .  and  the  manner  of  carrying  them  into  effect." 
(Report  of  July  28,  182 1.)  These  are,  we  think,  the  last 
echoes  of  reactionary  principles,  and  it  is  interesting  to  find 
them  in  a  period  where  the  right  of  representatives  of  the 
country  to  control  the  purse  seemed  definitely  to  have  been 
established. 

The  ordinance  of  September  2,  1827,  soon  followed;  this 
extended  the  control  of  the  legislature  to  the  amounts  granted 
to  each  ministry;  then  finally  the  law  of  January  29,  1831, 
extended  the  control  of  the  legislature  as  far  as  the  detailed 
items  of  agjgropriation  to  each  ministry,  as  will  be  ^iTown 
later.  From  that  date  the  legislative  authority  has  been  in 
possession  of  all  its  rights.  It  was  not  till  then  that  the 
right  to  control  the  purse,  in  part  established  in  1789,  at- 
tained its  complete  development. 

Our  financial  codes  still  show  traces  of  these  indecisions, 
for  no  text  even  now  concedes  to  the  representatives  the  right 
to  vote  on  public  expenditures.  The  regulation  of  May  31, 
1862,  in  its  Article  30  provides:  "The  public  revenues  to  be 
collected  and  expenditures  to  be  made  for  the  use  of  each 
fiscal  year  shall  be  authorized  by  annual  fiscal  laws."  This 
regulation,  however,  is  simply  a  decree  of  the  Government, 
and  the  Marquis  d'Audiffret  was  right  in  saying:  "No  law 
by  its  text  has  ever  ordered  the  establishment  of  a  general 
budget  of  the  State."     (Systeme  Financier  de  la  France.) 


49 


PART   I 
PREPARATION   OF  THE   BUDGET 


CHAPTER  III 
THE  KRAMERS  OF  THE  BUDGET 

General  Subdivisions  of  Budget  Procedure:  Preparing  the  Budget; 
Voting  the  Budget;  Executing  the  Budget;  Enforcing  Accountabil- 
ity. 

The  Preparation  of  the  Budget:  The  Question  of  Initiative; 
Necessarily  a  Function  of  the  Executive;  Examples  of  Methods 
Used;  The  English  Practice;  All  Initiative  in  Executive;  Technical 
Application  of  Rule;  How  Rule  is  Circumvented  and  With  What 
Result;  Unanimity  of  Chancellors  of  Exchequer;  Public  Opinion 
Necessary  to  Enforce  Any  Practice;  Practice  in  France;  Results 
of  Legislative  Initiative;  League  of  Taxpayers  Against  Legislative 
Initiative;  Change  in  Legislative  Rules;  Only  a  Half  Measure; 
Practice  in  Other  Countries. 

Agencies  Cooperating  in  the  Preparing  of  the  Budget:  In  France 
— Two  Classes  of  Agencies,  Local  and  Central. 

Local  Administrative  Agencies :  Procedure  in  Central  Executive 
Offices  of  Departments;  Heads  of  Bureaus  and  Other  Work  Di- 
visions; The  Minister  as  Departmental  Executive;  His  Line  and 
Staff  Advisors;  The  Minister  Responsible  for  the  Estimates. 

Central  Agencies  in  France — The  Minister  of  Finance:  Type  of 
Person  Required  as  Finance  Minister;  De  Villele  and  others — as 
Examples  of  Type;  Necker's  Views  on  the  Subject;  An  English 
Concept  of  the  Position ;  The  Constitutional  Position  of  the  Finance 
Minister;  The  Status  Given  Him  in  France;  Superior  Powers  Rest 
On  His  Position  in  Cabinet;  In  What  Respect  Superior  to  Other 
Ministers;  Under  Sully;  Under  Jean-Baptiste  Colbert;  Under  Col- 
bert; Under  Necker;  Under  Napoleon;  After  the  First  Napoleon; 
Under  the  Second  Empire;  Two  Groups  of  Agencies. 

Character  of  Advisory  and  Staff  Divisions:  Divisions  Not  Di- 
rectly Used  in  Preparing  the  Budget;  Staff  Divisions  Directly  In- 
volved; Division  of  Public  Accounting — Its  Functions;  Preparation 
of  Budget  and  Finance  Bills;  Preparation  and  Publication  of 
Financial  Statements;  Administration  of  Accounting;  Collection  of 
Direct  Taxes;  Division  of  Transfer — Its  Functions;  Distribution 
of  Funds;  .Finding  Supplementary  Revenues;  Supervision  of  In- 

SI 


THE  BUDGET 

stitutions  of  Public  Credit,  etc.;  Division  of  Control  of  Finance 
Administration — Its  Functions;  Offices  or  Bureaus  of  Finance  Ad- 
ministration; Organization  and  Personnel;  The  Function  of  Man- 
aging Boards;  Relation  of  Organization  to  Minister;  Subordinate 
or  "Vassal"  Institutions;  The  Caisse  des  Depots  et  Consignations; 
The  Cour  des  Comptes;  The  Bank  of  France ;  The  Credit  Fonder; 
The  Rural  Credit  Associations;  Bourses,  Stock  Brokers,  etc.;  Quasi- 
public  Corporations;  The  Rule  of  Precedence;  The  Treasury  in 
England;  Its  Constitutional  Position;  Its  Organization;  Prime  Min- 
ister Usually  First  Lord  of  Treasury;  Direct  Responsibility  for 
Finances;  Public  Opinion  Back  of  this  Plan  of  Control;  Distinction 
Made  With  Respect  to  Army  and  Navy.    Recapitulation. 

[The  preceding  chapters  have  dealt  with  the  subject  his- 
torically. We  turn  now  to  the  procedure,  by  means  of  which 
the  principles  of  popular  control  over  the  public  purse  through 
elected  representatives  have  been  made  effective.] 


Four  General  Subdivisions  of  the  Subject  of  Budget 

Procedure 

A  study  of  budget  procedure  necessitates  the  successive 
examination  of  four  major  operations  which  have  the  merit 
of  being  chronological,  reasonable  and  universally  adopted: 

1.  Preparing  the  budget. 

2.  Voting  the  budget. 

3.  Executing  the  budget. 

4.  Enforcing  accountability. 

[Each  of  these  major  operations  is  made  the  subject  of  a 
separate  "part"  of  the  text  which  follows.] 

Preparing  the  Budget:  The  first  part  takes  up  the  budget 
estimates  at  their  inception,  while  still  in  the  hands  of  their 
framers,  and  carries  them  through  the  executive  heads  of 
spending  departments,  as  far  as  the  Minister  of  Finance. 
During  this  discussion  such  terms  or  expressions  as  "receipts 
and  expenditures,"  "universality"  [comprehensiveness  of 
plan],  "specialization"  [the  special- funding  of  different 
branches  of  the  service],  "increases,"  "estimated  and  limited 
appropriations"  etc.,  will  be  used  and  defined. 

Voting  the  Budget:  The  second  part  deals  with  the  legis- 
lative body:  its  committees   (commissions);  its  general  dis- 

52 


THE  FRAMERS  OF  THE  BUDGET 

cussions;  its  discussions  of  individual  items  (articles);  and 
the  bringing  of  discussion  to  an  end  in  votes.  Consideration 
is  also  given  to  voting,  first  in  the  lower  or  representative 
house,  and  then  in  the  upper  chamber.  The  procedure  of 
voting  on  the  several  chapters  and  items  of  the  regular  budget 
is  also  discussed,  as  is  voting  on  additional  appropriations  etc. 

Executing  the  Budget:  The  third  part  has  to  do  with 
executing  the  budget.  This  extends  into  the  domain  of  finan- 
cial administration  and  describes  the  hierarchical  organization 
through  which  the  money  collected  from  the  taxpayer  is  sub- 
sequently centralized  in  the  treasury,  and  how  it  reaches  an- 
nuitants, pensioners,  civil  and  military  officials  and  employees, 
contractors  etc. 

Enforcing  Accountability:  The  fourth  part  deals  with  the 
control  of  these  operations  [the  enforcement  of  official  ac- 
countability through  review  of  transactions  after  the  budget 
has  been  executed].  Did  the  executive  exceed  his  power? 
Have  the  individuals  in  charge  of  the  execution  of  the  budget 
and  those  who  are  accountable  complied  exactly  with  the  terms 
and  conditions  imposed  by  the  legislature?  Here  the  main 
decision  rests  with  the  Cour  des  Comptes,^  where  the  question 
of  regularity  or  legality  is  finally  passed  on.  Thus  the  budget 
prepared  by  the  Executive  passes  into  the  hands  of  the  legis- 
lature [for  its  approval  or  enactment]  ;  then  it  comes  back 
into  the  hands  of  the  Executive  to  be  put  into  operation ;  and 
[after  review]  it  is  finally  sent  back  to  the  legislature  which 
acts  as  a  supreme  judge  of  the  accounts. 

The  Preparation  pf  the  Budget 

A  discussion  of  the  procedure  used  in  the  preparation  of 
the  budget  raises  in  succession  the  three  following  questions : 
Who  prepares  the  budget?  When  is  the  budget  prepared? 
How  is  the  budget  prepared  ? 

The  Question  of  Initiative:  Necessarily  and  legally  the  Necessarily 
Executive  prepares  the  budget.  The  Executive  alone  can  and  ^^^^^^^^ 
should  do  this  work.^     Situated  at  the  center  of  government.  Executive 

[^  Cours  des  Comptes  is  a  court  sitting  in  Paris,  the  duties  of  which 
are  to  verify  public  accounts. — The  Editor.] 

-  "Of  all  the  laws,  the  financial  law  is  the  one  the  initiative  of 

53 


THE  BUDGET 

reaching  through  its  hierarchical  organization  to  the  smallest 
unit,  the  Executive  more  than  anybody  else  is  in  a  position  to 
feel  public  needs  and  wishes,  to  appreciate  their  comparative 
merits,  and  accordingly  to  calculate,  in  the  budget,  a  just 
appropriation  which  each  of  these  needs  and  wishes  deserves. 
Others  may  know  certain  details  as  well,  possibly  better  than 
the  Executive,  but  nobody  can  have  so  extensive  and  impar- 
tial a  view  of  the  mass  of  these  details,  and  no  one  can  com- 
promise the  conflicting  interests  with  so  much  competence  and 
precision.  Moreover,  the  Executive,  charged  with  the  execu- 
tion of  the  budget,  is  compelled,  through  concern  as  to  his 
future  responsibility,  to  prepare  as  well  as  possible  the  plan. 
Under  the  Restoration  a  speaker  expressed  this  idea  in  the 
following  rather  figurative  terms: 

"The  pilot  in  charge  of  steering  a  vessel  is  the  only 
competent  judge  of  the  position  and  of  the  spread  he  has 
need  to  give  his  sails,  because  he  alone  is  posted  in  such 
a  way  as  to  know  the  force  and  the  direction  of  the  winds 
and  currents,  which  may  hinder  or  delay  his  movements." 
(Report  on  the  regulation  of  the  budget  for  1814  and 
181 5,  Chambre  des  Pairs,  18 16.) 

The  man  who  wants  to  build  a  house  begins  by  getting 
plans  from  the  architect  who  is  to  have  charge  of  the  con- 
struction work,  the  owner  reserving  for  himself,  however,  the 

which  should  most  naturally  be  an  attribute  of  the  executive.  The 
latter  alone  is  in  position  to  know  the  extent  and  the  urgency  of  the 
needs  of  the  government.  The  executive  alone  can  judge  from  his 
vantage  point  at  what  limits  taxation  should  stop.  This  knowledge 
can  come  only  as  the  result  of  daily  experience  in  all  the  branches 
of  the  administration  as  well  as  of  the  comparing  and  combining  of 
information  collected  in  the  various  parts  of  the  kingdom  and  cen- 
tralized in  the  same  point  of  observation."  (Report  of  Marquis  de 
Garnier  in  the  Chambre  des  Pairs,  relating  to  the  budget  of  1821, 
July  28,  1821.) 

Chateaubriand,  although  he  was  very  little  interested  in  finances, 
said:  "The  preparation  of  the  budget  is  essentially  a  royal  prerogative. 
.  .  .  It  is  the  general  rule  that:  the  budget  should  be  prepared  by 
the  ministry  and  not  by  the  Chamber  of  Deputies  which  has  to  pass 
on  that  budget.  If  the  latter  were  preparing  the  budget  it  could  not 
demand  an  account  of  its  own  work  and  the  ministry  would  refuse 
to  be  responsible  for  the  most  important  function  of  the  administra- 
tion. Thus  the  elements  of  the  Constitution  would  be  shifted."  {De 
la  Monarchie  selon  la  Charte,  by  the  viscount  de  Chateaubriand. 
Paris,  1826.) 

54 


THE  FRAMERS  OF  THE  BUDGET 

right  to  examine,  to  improve  or  to  reject  these  plans  and  esti- 
mates, should  such  action  be  necessary.  In  the  same  way,  the 
legislative  body  commissions  the  Executive  to  draw  up  and 
to  submit  to  it  a  program  of  revenues  and  expenditures  for 
the  coming  year. 

Although  all  countries  necessarily  entrust  to  their  execu-  Examples  of 
tives  the  work  of  preparing  their  budgets,  each  one  does  it   us?d° 
with  more  or  less  restriction.     Let  us  first  study  the  country 
which  gives  the  widest  latitude  to  the  prerogatives  of  its 
executive. 

The  English  Practice:  In  England,  the  House  of  Com- 
mons surrendered  all  its  initiative  in  the  matter  of  the  budget 
to  the  Crown.  In  accordance  with  its  own  regulation,  it  vol- 
untarily abstains  from  any  action  which  might  disturb  the 
equilibrium  of  the  public  finances.  Since  1706,  the  following 
rule  has  been  in  existence  in  the  Standing  Orders: 

'This  House  shall  not  accept  any  petition  for  any  sum 
of  money  relating  to  the  public  service,  nor  shall  it  pass 
upon  a  motion  which  would  bring  about  a  vote  on  a  sub- 
sidy or  on  a  charge  against  public  revenues  .  .  .  unless 
upon  recommendation  of  the  Crown.* 

On  March  20,  1866,  this  provision  was  renewed  in  the  fol- 
lowing order  of  the  day: 

'The  House  shall  not  admit  any  proposition  tending 
to  obtain  any  appropriation  whatsoever,  nor  shall  it  take 
action  on  any  motion  which  would  involve  an  expenditure  All 
to  be  charged  against  the  revenues  of  the  State,  other  1°  Executive 
than  the  requisitions  formulated  by  the  Crown.* 

Thus  the  House  of  Commons,  notwithstanding  its  power 
to  do  what  it  pleases,  does  not  permit  itself  to  propose  in- 
creases in  expenditures  or  reductions  in  revenues.  The  in- 
itiative of  the  English  Cabinet  in  the  matter  of  the  budget, 
so  far  as  its  preparation  is  concerned,  remains  unimpaired.  ^ 
The  Government's  part  is  to  propose  and  Parliament's  part 
is  to  grant,'  according  to  the  formula  expressed  by  the  First 
Lord  of  the  Treasury.^     The  Executive  levies  no  tax  and 

^  Sir  Stafford  Northcote,  in  an  article  of  the  Dictionnaire  de  la 
politique  dealing  with  the  finances  of  England,  says:  The  Crown 
demands,  the  Commons  grant,  and  the  Lords  consent.' 

55 


THE  BUDGET 


Technical 
Application 
of  Rule 
Strictly 
Followed 


How  Rule  Is 
Circum- 
vented— and 
With  What 
Result 


Unanimity 
of  Chan- 
cellors of 
Exchequer 


makes  no  expenditure  without  the  approval  of  Parliament; 
but  conversely,  the  English  Parliament  votes  no  increase  of 
expenditures  and  no  reduction  in  the  revenues  without  a  pro- 
posal to  that  effect  from  the  Cabinet. 

This  principle  has  been  most  scrupulously  lived  up  to  [for 
more  than  two  hundred  years].  The  Commons,  for  instance, 
refused  to  examine  the  petition  for  the  reversion  of  a  pension 
to  the  son  of  a  pensioner  because  a  prolongation  of  the  ex- 
penditure might  eventually  result  from  that  for  the  Treasury. 
The  extensive  work  of  Sir  [Thomas]  Erskine  May  on  the 
Constitutional  History  of  England  mentions  this  case  and 
many  others  of  the  same  nature. 

However,  despite  the  authority  of  the  rules  still  officially 
binding,  there  are  certain  indications  ^  that  these  rules  are 
now  quite  seriously  jeopardized  by  circuitous  means.  The 
rising  tide  of  public  expenditures  goes  around  the  dam,  if  it 
does  not  break  through  it.  Unfortunately,  certain  encroach- 
ments upon  the  initiative  of  Parliament  cannot  be  denied. 
The  Chancellors  of  the  Exchequer  openly  complain  of  it. 

In  1883,  Mr.  Childers  in  his  official  statement  says: 

*The  Minister  of  Finance  must  devote  still  more  care 
to  the  increase  of  public  expenditures,  because  Parlia- 
ment, which  in  former  times  undertook  the  task  of  watch- 
ing over  public  expenditures,  seems  of  late  to  be  less  anx- 
ious to  husband  the  public  funds.    In  the  last  three  years 
there  have  been  576  propositions  involving  increases  and 
.       reductions  of  expenditures ;  but  only  twenty  related  to  re- 
(       duction  and  556  related  to  increases.'     (Session  of  April 
V_5,  1883,  explanatory  statement  of  the  budget,  1883-1884.) 

In  1887,  Mr.  Goschen  stated  that  in  the  past  seventeen  years 
the  expenditures  of  the  civil  administration  had  increased' 
216,000,000  francs.  This  increase,  he  said,  was  caused  to  a 
much  greater  extent  by  Parliament  than  by  the  various  Gov- 
ernments which  had  been  in  power  during  the  last  twenty 
years.     Further  on  Mr.  Goschen  adds: 

*  Thus,  certain  plans,  intended  to  deal  apparently  with  consideration 
of  the  Crown's  right  of  initiative,  are  added  in  the  following  formula : 
"Expenditures  to  be  paid  from  funds  which  'shall*  be  appropriated  by 
Parliament."  Or  the  Commons  vote  an  address  or  pass  a  resolution 
involving  for  the  executive  the  moral  obligation  eventually  to  ask 
for  additional  appropriations.  Or  members  of  Parliament,  particularly 
by  individual  request,  call  forth  the  submitting  of  this  or  another 
estimate  of  expenditures  by  the  minister. 


/ 


THE  KRAMERS  OF  THE  BUDGET 

'Although  the  condition  of  the  treasury  is  not  bad,  it 
would,  however,  be  desirable  if  the  members  of  Parlia- 
ment would  abstain  from  demanding  the  assistance  of  the 
ministers  for  all  matters  in  .which  they  happen  to  be  in- 
terested, for  purchasing  of  pictures,  furnishing  museums, 
establishing  technical  schools  and  colleges,  for  fortifying 
the  colonies,  etc.  .  .  /  (Financial  statement  of  April 
21,1887.) 

In  1893,  Sir.  Vernon  Harcourt^  likewise  said: 

The  initiative  of  Parliament  is  very  generous,  because 
it  has  little  or  no  responsibility  and  it  runs  wild.  A  scien- 
tific campaign  is  organized  and  conducted  in  the  House, 
and  on  some  fine  day  a  resolution  is  passed  which  costs  the 
State  tens  of  millions.  This  accounts  for  the  large  in- 
crease in  public  expenditures.'     (Statement  of  April  24, 

,^893.) 

In  1895,  he  again  complains  that 

*Each  year  new  expenditures  are  demanded  from  all 
sides  for  every  sort  of  thing.  And  at  the  same  time  that 
these  increases  of  expenditures  are  suggested,  the  abolition 
of  some  source  of  revenues  is  attempted.'  (Statement  of 
May  2,  1895.) 

In  1897,  SiJ"  Michael  Hicks-Beach  said:  T  do  not  want 
to  preach  on  the  subject  of  economy.  I  tried  last  year  to 
eflfect  some  economies  although  within  restricted  limits.  But 
I  am  sorry  to  have  to  say  that  of  all  the  disbursing  depart- 
ments the  House  of  Commons  is  the  worst.' 

^  Sir  Vernon  Harcourt,  who  prides  himself  on  belonging  "to  the 
old  school,"  regrets  the  time  when  economy  was  favored  by  Parlia- 
ment and  by  the  Public.  'Economy  in  finances  had  the  same  lot 
as  political  economy  and  a  Chancellor  of  the  Exchequer  who  in  these 
times  preaches  economy  is  preaching  in  the  desert.  The  Treas- 
ury is  very  readily  accused  of  parsimony.  May  God  grant  that  it  be 
still  more  parsimonious.  Nowadays,  if  anyone  suggests  some  new 
expenditure  it  is  accepted  as  readily  as  some  newly  discovered  amuse- 
ment.' His  statement  of  May  2,  1895,  reiterates:  'Now,  at  the  end 
of  the  nineteenth  century,  economy  harks  back  to  a  forgotten  art; 
it  has  become  a  petty  and  outworn  concern.' 

He  states  further  that  the  reason  why  he  wished  to  see  expenditures 
reduced  was  because  they  were  "useless,"  in  his  opinion.  This  admis- 
sion deserves  to  be  noted,  as  it  may  possibly  apply  to  countries  other 
than  England. 

57 


THE  BUDGET 

The  limitation  of  parliamentary  initiative  in  budget  mat- 
ters through  regulations  has  not,  therefore,  proved  a  pana- 
cea; custom  alone  renders  the  rules  effective.  'The  policy  of 
economy  was  once  possible  and  even  popular;  the  Govern- 
ment was  almost  forced  to  be  economical;  public  opinion 
compelled  it.  Today  all  is  much  changed,'  gloomily  com- 
ments the  Chancellor  of  the  Exchequer.  'The  very  moment 
public  sentiment  runs  contrary  to  economy,  the  best  regula- 
tions become  ineffective.' 

Thus  the  figures  of  the  modern  budgets  of  England  are  no 
longer  encouraging.  For  1908- 1909  the  estimated  expendi- 
tures rose  to  3,820,000,000  francs.  For  1912-1913,  they 
amounted  to  4,292,000,000  francs,  not  counting  the  supple- 
mentary appropriations  for  naval  constructions,  voted  in  July, 
19 12.  In  1875,  they  only  totaled  1,625,000,000  francs.  Thus 
the  increase  is  130  per  cent  during  the  first  series  of  33  years, 
and  187  per  cent  during  the  37  years. 

The  expenditures  of  the  South  African  war,  of  course, 
largely  increased  the  budgets.  The  growth,  however,  had 
begun  about  1894  and  1895,  several  years  prior  to  the  war. 
Until  that  time  the  Standing  Orders  seem  to  have  produced 
a  relatively  wholesome  effect,  as  was  expected.  After  the 
barrier-  was  once  passed,  however,  the  regulations  existed 
merely  on  paper. 


Public 
Opinion 
Necessary  to 
Enforce  Any 
Practice 


Tor  the  last  four  years,'  said  the  Chancellor  of  the 
Exchequer  in  his  financial  statement  of  April  13,  1899, 
*the  total  increase,  including  the  sum  produced  by  local 
taxation,  amounted  to  476,900,000  francs.  The  increase 
in  expenditures  for  1899- 1900  will  amount  to  150,000,000 
francs,  which  increase  follows  one  of  125,000,000  francs 
for  the  past  year.' 


Thus  the  restraint  which  the  House  of  Commons  imposed 
upon  itself  proved  to  be  effective  only  so  long  as  public  opin- 
ion forced  the  Government  to  economize  and  held  in  check 
'the  robbers  concealed  in  the  parliamentary  brushwood,'  of 
whom  Gladstone  spoke.  Nowadays,  when  the  fever  for  arma- 
ments and  imperialism  is  seizing  the  country,  these  checks 
are  temporarily  powerless.  Nevertheless  a  well-constructed 
budgetary  mechanism  should  always  have  its  checks  in  order, 
ready  to  be  applied. 

58 


THE  FRAMERS  OF  THE  BUDGET 

Practice  in  France:  In  France  the  deputies  until  recently 
had  the  power  of  suggesting  individually  and  at  will  any  in- 
crease of  expenditures  and  any  reduction  of  revenues.^  The 
initiative  of  the  Parliament  in  the  matter  of  the  budget  was 
coincident  with  the  initiative  of  the  Executive  which  was 
thus  proportionately  reduced. 

Results  of  Legislative  Initiative:  From  this  resulted  two 
great  abuses:  An  open  door  for  ill-advised  action  and  de- 
struction of  the  equilibrium  of  the  budget,  the  first  causing 
the  second.  Ill-advised  action  was  inevitable  from  the  mo- 
ment each  deputy  was  permitted  to  set  forth  on  the  floor  his 
reasons  for  asking  an  increase  of  expenditures  or  for  a 
reduction  of  revenues,  according  to  his  individual  opinion  or 
in  behalf  of  his  constituency.  Such  pleadings  studied  with 
particular  care  ^  by  their  authors,  masterfully  presented,  often 
with  passion,  stood  a  good  chance  of  influencing  the  Assem- 
bly. In  a  general  way,  however,  it  should  be  noted  how 
matters  of  taxation  or  public  expenditures  treated  separately 
and  without  regard  to  balances,  can  become  misleading.  A 
suggestion  to  increase  the  appropriation  for  some  branch  of 
service  in  need,  to  increase  the  salaries  of  subordinate  em- 
ployees insufiiciently  paid  or  to  increase  the  pensions  of  for- 
mer servants  of  the  State  or  those  of  poor  members  of  mutual 
aid  societies,  etc.,  to  make  an  appeal  to  the  generosity  of  the 
heart  or  patriotic  pride  of  the  auditors,  is  an  easy  way  to 
achieve  an  irresistible  success. 

"When  we  are  asked  to  vote  on  a  measure  which  has 
been  eloquently  and  ardently  urged  without  giving  us 
time  enough  for  reflection,  we  are  at  times  subjected  to 
a  test  that  is  too  much  for  a  good  many  of  us.  Certain 
precautions  ought,  therefore,  to  be  taken,  not  with  the 
purpose  of  abolishing  the  power  of  the  Chamber,  but  to 
insure  a  more  considerate  and  less  harmful  way  of  exer- 

^  Consult  the  standard  works  of  Emile  Larcher,  L'initiative  parte- 
mentaire  en  France,  Paris,  1896;  and  Louis  Michon's  Uinitiative 
parlementaire,  Paris,  1898. 

2  We  say  "studied  with  particular  care"  from  the  point  of  view  of 
oratorical  effect  and  not  from  the  point  of  view  of  figures.  As  a  rule 
the  Chamber  thinks  that  it  is  voting  on  a  modest  sum,  while,  as  a  mat- 
ter of  fact,  millions  are  involved.  Officials  reporting  on  the  budget 
vfiinly  renew  their  complaints  of  these  deceptions. 

59 


THE  BUDGET 


cising  its  power, 
of  M.  Ribot.) 


(Session  of  March  i6,  1900.    Speech 


League  of 

Taxpayers 

Against 

Legislative 

Initiative 


C 


Change  in 
Legislative 
Rules 


Mention  may  be  made  of  the  few  precautions,  spiritless 
though  they  be,  which  the  Chamber  of  Deputies  took  in  1900: 
For  several  years  the  initiative  of  the  deputies  had  been  the 
subject  of  attack.  Those  in  charge  of  reporting  on  the  budget 
have  shown — 'by  adding  the  totals  resulting  from  amendments 
due  to  individual  initiative — that  the  adoption  of  such  amend- 
ments would  have  increased  the  budget  hundreds  of  millions. 
Many  orators  have  pleaded  with  their  colleagues  to  renounce 
the  initiative  as  a  dangerous  practice. 

"Ah!  The  initiative  of  the  Parlcmcntr  said  Ribot. 
"I  do  not  wish  to  speak  ill  of  it ;  here  we  know  its  worth 
since  we  have  to  judge  the  results.  If  the  initiative  of 
Parlcmcnt  is  substituted  for  that  of  the  executive,  then 
the  most  active  and  the  most  noisy  and  not  the  most 
deserving  will  benefit  by  its  use." 

At  the  same  time  the  League  of  Taxpayers  adopted  as  the 
main  point  of  its  program  the  abolition  of  the  initiative  of 
the  deputies.  The  question  then  became  ripe  for  discussion. 
Thus  in  March,  1900,  at  the  end  of  the  discussion  on  the 
budget  for  that  fiscal  year  and  after  the  Chamber  had  made 
large  use  of  its  power  to  increase  expenditures,  the  legislative 
prerogative  of  initiating  amendments  was  first  struck  at  by 
a  vote  enacting  the  following  modifications  to  the  internal 
regulations  of  the  Assembly:  "Article  51 — As  far  as  the 
budget  law  is  concerned,  no  additional  amendment  or  article 
tending  to  increase  expenditures  can  be  brought  in  after  the 
three  sessions  which  follow  the  distribution  of  the  report  in 
which  the  chapter  in  question  was  contained.*' 

"Article  51 — 'Idem-.  No  proposal  either  to  increase  sal- 
aries, annuities  or  pensions,  or  to  create  new  branches  of 
service,  offices,  pensions,  or  to  extend  them  beyond  the 
limits  set  by  the  laws  in  force  at  the  present  time  can 
be  made  in  the  forni  of  an  amendment  or  of  an  additional 
article  of  the  budget."     (Session  of  March  6,  1900.) 


Only  a  Half        xhe  new  Articles  51  and  51 — Idem,  as  we  have  seen,  stipu- 

easure         j^^^  nothing  with  regard  to  the  reduction  of  revenues.     The 

'* Standing  Orders"  of  the  House  of  Commons,  however,  in- 

60" 


THE  KRAMERS  OF  THE  BUDGET 

eluded  them  in  its  list  of  prohibitions.  So  far  as  expendi- 
tures are  concerned/  proposals  relating  to  increases  benefit- 
ing individuals — that  is,  increases  of  salaries,  annuities,  of- 
fices and  pensions — are  the  only  ones  that  are  prohibited. 

The  reform,  therefore,  is  relatively  unimportant,  both  in 
the  text  of  the  changed  rule,  and  in  results  obtained  which 
seem  to  be  nearly  negligible.  Its  only  merit  lies  in  its  tend- 
ency to  bring  about  a  better  condition  of  affairs.  But  even 
this  tendency  provoked  opposition  and  is  still  opposed.  Its 
adversaries  maintain  that  the  rights  of  the  legislative  body 
could  be  neither  contravened  nor  limited;  and  on  this  pre- 
text, which  is  flattering  to  the  pride  of  the  Chamber,  this 
feeble  barrier  erected  in  1900  may  some  day  be  swept  aside.^ 
This  attempt  to  make  the  executive  responsible  for  initiating 
the  budget  has  been  resisted  until  there  is  little  prospect  in 
the  near  future  of  the  principle  obtaining  the  support  which 
it  deserves.^  The  only  thing  that  can  be  done  is  for  the 
practice  to  remain  as  at  present,  and  for  the  modification  re- 

^  Any  amendment  tending  to  increase  the  expenditures,  regardless 
of  its  nature,  must,  under  penalty  of  estoppel,  be  deposited  within 
three  days  after  the  reading  of  the  report.     (Article  51.) 

Amendments  relating  to  increases  of  personnel  are  the  only  ones 
which  are  absolutely  prohibited.  (Article  51 — Idem.)  The  innova- 
tiop,  just  as  the  author  of  the  suggestion  has  explained,  consisted 
mainly  in  the  fact  that  henceforth  a  special  law  should  always  be 
required  in  order  to  create  offices  or  to  change  the  organization  in 
the  sense  of  an  increase  of  expenditures.  (Speech  of  M.  Berthelot, 
Deputy,  March  15,  1900.) 

2  At  the  session  of  December  4,  1906,  in  the  Chamber  of  Deputies,  a 
discussion  took  place  on  the  plan  of  a  resolution  which  was  presented 
by  a  certain  number  of  members  and  which  read  as  follows :  "Article 
51 — Idem  of  the  regulation  of  the  Chamber  of  Deputies  is  repealed." 
134  votes  were  cast  for  the  adoption  of  this  resolution,  403  against. 

^  On  May  4,  1902,  the  author  of  the  suggestion  of  a  restriction  of 
parliamentary  initiative,  which  was  adopted  in  1900,  sought  in  vain 
to  submit  to  the  Chamber  a  new  plan  more  comprehensive  than  the 
preceding^  one  and  tending  to  prohibit  every  demand  for  an  increase 
of  expenditure,  the  corresponding  part  of  which  in  revenues  was  not 
.voted  in  advance.  Several  speakers  insisted  that  this  would  mean  an 
attempt  against  the  privileges  of  the  Chamber  and  against  the  in- 
tegrity of  universal  suffrage.  This  plan  was  rejected  by  261  votes 
to  241.  See  plan  of  Resolution,  June  19,  1902,  signed  by  105  deputies 
and  tending  to  abolish  completely  the  initiative  of  the  legislature. 

On  December  15,  191 1,  however,  Article  60  of  the  regulations  of  the 
Chamber  of  Deputies  received  the  following  addition :  "Any  resolu- 
tion involving  an  increase  of  expenditures  can  be  voted  on  only  after 
being  reported  on  by  the  commission  on  budget." 

61 


THE  BUDGET 

f erred  to  above  to  render  such  service  ^  as  it  may,  until  a 
wave  of  economy  gives  it  [the  principle  of  executive  initia- 
tive] a  broader  application. 

Practice  in  Other  Countries:  Italy  ^  and  Belgium  ^  suffer 
just  as  we  do  from  the  initiative  of  the  legislative  body. 

In  the  United  States  the  Constitution  would  seem  at  first  to 
assign  to  the  House  of  Representatives,  itself,  the  care  of 
the  preparation  of  the  budget.  But  upon  closer  examination 
we  find  that  there,  as  well  as  in  all  other  countries,  the  Execu- 
tive necessarily  acts  before  anything  can  be  done  by  the 
House  of  Representatives.  As  a  matter  of  fact,  the  commit- 
tees of  the  House  have  the  special  mission  of  preparing  and 
submitting  finance  bills.  It  is  necessary,  however,  that  their 
work  be  preceded  by  [departmental  estimates  *  and]  sugges- 
tions from  the  Secretary  of  the  Treasury.  The  text  of  the 
statute  on  the  subject  is  as  follows: 

*The  Secretary  of  the  Treasury  shall  at  the  beginning 
of  each  regular  session  (the  first  Monday  in  December) 
submit  to  Congress  a  statement  of  the  needs  of  each  de- 

^  Thus,  a  suggestion  made  during  the  session  with  regard  to  the 
State  remunerating  municipal  forest-guards  was  declared  non-accept- 
able by  the  President  of  the  Chamber  on  November  i8,  1907,  because 
the  period  of  three  sessions  since  the  distribution  of  the  report  was 
exceeded.  In  spite  of  the  insistence  of  the  author,  the  amendment 
could  not  be  submitted  to  vote,  and  the  improvised  plan  of  expendi- 
tures was  postponed  until  further  mature  consideration. 

2  In  Italy,  the  Minister  of  the  Treasury,  Sonnino,  in  his  estimates 
for  the  fiscal  years  1896-1897,  speaks  of  "a  continuously  increasing 
stream  of  solicitations  and  unreasonable  demands  which  manifested 
themselves  through  parliamentary  intervention  as  soon  as  a  reestab- 
lishment  of  financial  equilibrium  was  announced."  (Statement  of  No- 
vember 25,  1895.) 

*  In  Belgium,  the  Minister  of  Finance,  de  Smet  de  Naeyer,  com- 
mented as  follows:  "I  cannot  sufficiently  emphasize  the  ill  effects 
which,  from  the  point  of  view  of  the  equilibrium  of  the  budget,  would 
be  incurred  through  suggesting  a  reduction  of  taxes  or  an  increase 
in  expenditures."  (Statement  of  supporting  arguments  for  the  budget 
for  the  fiscal  year  1896,  Chamber  of  Representatives  of  Belgium.) 
Emile  Larcher  in  his  book  states,  however,  that  in  Belgium  fewer 
complaints  are  made  of  the  initiative  of  the  legislature  than  in  France. 

*  [The  requirements  run  here  as  follows :  "That  hereafter  it  shall 
be  the  duty  of  the  heads  of  the  several  executive  departments,  and  of 
other  officers  authorized  or  required  to  make  estimates,  to  furnish  to 
the  Secretary  of  the  Treasury,  on  or  before  the  15th  of  October  of 
each  year,  annual  estimates  for  the  public  service;  .  ,  /'    Editor.] 

62 


THE  FRAMERS  OF  THE  BUDGET 

partment  of  the  administration  for  the  fiscal  year  begin- 
ning with  the  first  of  July  next/ 

David  Wells  gives  the  following  commentary  on  this  pro- 
vision: 'The  different  departments  of  the  Federal  Govern- 
ment submit  to  Congress  at  the  beginning  of  each  session 
their  estimates  of  expenditures  for  the  ensuing  fiscal 
year,  which  suggestions  are  supplemented  by  detailed  re- 
ports/ (David  Wells,  letter  in  reply  to  an  inquiry  on 
legislative  control  conducted  by  the  Cobden  Club,  July 
24,  1876.) 

Then  only  after  the  estimates  of  revenues  and  expenditures 
compiled  by  the  Secretary  of  the  Treasury,  together  with  their 
annexed  details  have  been  printed  and  distributed  to  all  the 
members  of  Congress,  the  committees  of  Congress,  supplied 
with  this  document,  undertake  to  formulate  finance  bills. 
These  committees  although  endowed  with  governmental  at- 
tributes unknown  to  our  legislative  commissions  do  not  en- 
croach on  the  executive  in  the  way  of  substituting  themselves 
for  the  executive  power  in  its  necessary  functions.^  On  the 
contrary,  they  expressly  enlist  the  preliminary  help  of  the 
Executive,  without  which  no  legislature  could  possibly  frame 
the  national  budget.^ 


Agencies  Cooperating  in  the  Preparation  of  the 
Budget  in  France 

The  executive  being  vested  by  all  the  constitutions  with 
the  mission  of  preparing  the  budget,  the  question  may  be 
asked,  *'What  authorities  within  the  executive  branch  perform 
this  work?  In  answering  this  question  it  can  be  said  that 
everybody  in  the  executive  branch  prepares  the  budget,  or  is, 
at  least,  associated  with  its  preparation.  This  is  indicated  by 
the  following  formula:  "Each  minister  prepares,  with  the 
help  of  his  official  collaborators,  the  budget  of  expenditures 

^  [This  observation  by  Stourm  must  be  based  on  a  misconception  of 
the  American  practice,  since  the  practice  as  it  exists  is  diametrically 
opposed  to  the  principle  laid  down  by  him  at  the  beginning  of  this 
chapter,  namely:  that  finance  measures  are  necessarily  the  result  of 
executive  initiative. — Editor.] 

2  [Again  the  author  errs  in  assuming  that  the  Government  of  the 
United  States,  either  by  executive  initiative  or  action  of  congressional 
committees,  has  anything  that  resembles  a  budget. — Editor.] 

63 


THE  BUDGET 


In  France, 
Two  Classes 
of  Agen- 
cies— Local 
and  Central 


for  his  own  department;  the  Minister  of  Finance  prepares, 
besides,  the  budget  of  revenues." 

In  the  hierarchy  of  the  collaborators  of  the  different  minis- 
ters, two  categories  have  to  be  distinguished :  Local  agencies 
and  central  administrations.  This  double  Hne  will  lead  us  as 
far  as  the  Minister  himself. 


Procedure  in 

Central 

Executive 

Offices 

of  the 

Departe- 

ments 


Heads  of 
Bureaus  and 
Other  Work 
Divisions 


Local  Administrative  Agencies:  The  local  agencies — 
scattered  throughout  the  territory,  close  to  the  public,  in  con- 
stant touch  with  the  people,  and  knowing  in  advance  and  bet- 
ter than  anybody  else  from  personal  observation  the  nature, 
the  extent  and  the  reality  of  the  country's  needs — are  the  first 
ones  to  prepare  the  estimates.  In  case  it  is  proposed  to  repair 
roads,  improve  river  beds,  raise  dams,  lengthen  locks,  con- 
struct or  locate  stores,  create  official  posts,  build  barracks, 
schools,  warehouses,  powdermills,  repair  buildings,  recon- 
struct dilapidated  works,  etc.,  the  local  services,  who  cause 
such  works  to  be  done,  can  best  indicate  the  degree  of  their 
utility,  or  furnish  information  as  to  the  importance  and  esti- 
mate the  cost  of  such  works.  Thus  the  initial  proposals  or 
estimates  come  from  the  local  services.  They  formulate  pro- 
posals or  estimates  either  during  the  year  in  their  official  com- 
munications and  periodical  reports,  or  as  special  reports  at 
the  time  the  estimates  are  prepared. 

From  the  hands  of  the  local  agents  these  suggestions  or 
estimates  are  forwarded  in  the  regulation  way  to  the  central 
office  of  the  departement.  This  is  the 'second  stage.  The 
central  bureaus  or  offices  in  each  ministry  distribute  among 
themselves  the  estimates  prepared  by  the  services  of  which 
the  ministry  in  question  has  charge.  Thus  in  the  Ministry  of 
the  Interior,  matters  relating  to  measures  adopted  for  reform- 
ing convicts,  sanitary  matters,  municipal  matters,  matters  of 
the  provinces,  of  general  safety,  public  charities,  etc.,  are 
handled  by  as  many  special  administrative  bureaus.  The 
Ministry  of  Public  Works  is  divided  in  the  same  way  into 
the  administrations  of  roads,  of  commercial  harbors,  of  in- 
land navigation,  of  railroads,  of  mines,  of  public  buildings, 
etc.;  the  Ministry  of  Agriculture  is  divided  into  the  adminis- 
trations of  stud  farms,  of  forests,  of  agricultural  hydraulics; 
the  Ministry  of  Public  Instruction  is  divided  into  the  ad- 
ministrations of  higher  teaching,  secondary  teaching,  primary 
teaching,  of  fine  arts,  of  worship,  etc.  Placed  at  the  head  of 
the  services   falling  within  the  sphere  of  their  competence, 

64 


THE  KRAMERS  OF  THE  BUDGET 


these  central  administrative  bureaus  receive  and  examine  the 
suggestions  or  estimates  transmitted  by  the  local  agencies,  re- 
serving for  themselves,  however,  the  final  revision  at  the 
time  of  the  preparation  of  the  departmental  estimates.  At 
this  time,  some  of  the  local  suggestions  or  estimates  may  be 
incorporated  in  the  administration  plan  with  or  without  modi- 
fications, while  others  may  be  postponed  or  rejected. 

The  initiative  of  the  central  administrative  bureaus,  how- 
ever, exceeds  the  restricted  area  within  which  local  agencies, 
their  subordinates,  act.  When,  for  instance,  enterprises  of 
interdepartmental  importance  or  reforms  affecting  the  entire 
departmental  service  or  the  whole  country  are  involved,  or 
when  modifications  are  contemplated  having  to  do  with  or- 
ganization of  the  personnel,  the  creation  or  abolishing  of 
offices,  changes  in  the  rate  of  salaries,  etc.,  the  central  adminis- 
trative bureaus  or  offices  of  the  department,  being  the  only 
ones  to  formulate  proposals  on  these  points,  do  so  on  their 
own  initiative.  All  the  departmental  suggestions  molded 
into  a  single  plan,  are  finally  submitted  to  the  minister  as 
executive  head. 

The  role  of  the  Minister  consists  in  summarizing  and  re- 
vising the  plans  of  his  various  administrative  bureaus  and 
offices  in  exactly  the  same  way  as  we  have  seen  these  adminis- 
trative bureaus  summarize  and  revise  the  suggestions  or  esti- 
mates of  the  local  agents.  Assisted  by  the  knowledge  of  a 
special  staff  division,  placed  under  his  immediate  orders — 
called  differently  at  different  times  under  the  various  minis- 
tries, division  of  accounting,  office  of  the  secretary  general, 
finance  division,  central  bureau,  cabinet,  etc. — the  Minister 
examines  the  different  estimates  which  are  suggested  to  him 
by  each  of  his  branches  of  service.  From  these  suggestions 
he  eliminates  unjustified  or  untimely  requests,  reduces  those 
which  are  excessive  and  admits  those  demands  to  which  there 
seem  to  be  no  objections.  Then,  if  there  be  occasion  for  it, 
he  completes  the  document  on  his  own  initiative  by  the  pro- 
posals bearing  on  the  whole. 

The  plan  now  l^ecomes  that  of  the  Minister  as  executive 
head  of  the  department  and  his  alone.  The  various  officers 
and  agencies  which  in  succession  cooperated  in  the  formation 
of  the  plan,  disappear  and  dissolve  in  the  work  of  the  Minis- 
ter. It  would  be  vain  to  search  for  or  to  try  to  distinguish  the 
origin  of  these  various  proposals  or  changes;  some  may  have 
come  from  local  agencies;  others  from  central  administrative 

65 


The  Minister 
as  Depart- 
mental 
Executive 


His  Line  and 

Staff 

Advisors 


The  Minister 
Responsible 
for  Esti- 
mates 


THE  BUDGET 

bureaus.  Finally  the  Minister,  personally,  may  add  his  con- 
tribution. After  the  changes  have  all  been  made,  the  total 
constitutes  a  single  departmental  budget,  or  requests  for  ap- 
propriation, by  the  responsible  Minister,  as  the  executive  head 
of  his  department. 

Every  departmental  budget  plan  thus  prepared  is  transmit- 
ted to  the  Minister  of  Finance.  Let  us  consider  this  per- 
sonage, important  both  as  to  his  personal  qualifications  and 
the  position  he  occupies. 

The  Central  Agencies  in  France — The  Minister  of  Fi- 
nance: Surrounded  by  the  personnel  of  his  central  office  and 
of  the  various  revenue  [and  disbursing]  offices,  having  broad 
powers  of  general  supervision  over  the  finances,  the  Minister 
of  Finance  commands  an  army  of  officers  throughout  the 
territory  under  the  jurisdiction  of  the  Government.^  His 
authority  extends  over  the  following  large  institutions :  Caisse 
des  depots  et  consignations,  office  of  old-age  pension  fund,  the 
savings  banks,  administration  of  the  mint,  Cour  des  Comptes, 
Bank  of  France,  Credit  fonder,  association  of  stockbrokers, 
etc.  Finally,  his  colleagues  in  the  Cabinet  recognize  his  au- 
thority as  that  of  the  man  who  holds  the  purse  strings  in  his 
hands. 


De  VilUle 
and  Others 
as  Examples 
of  Type 


Type  of  Person  Required  as  Finance  Minister:  It  is  an 
immensely  difficult  task  to  draw  a  likeness  of  the  Minister  of 
Finance  in  France,  for  the  reason  that  so  many  incumbents 
of  this  oflfice  have  succeeded  each  other  rapidly.  Who  shall 
be  chosen  as  typical  from  among  the  one  hundred  and  three 
holders  of  this  portfolio  within  the  last  hundred  years  ?^ 
Each  differs  from  his  predecessor  as  well  as  from  his  suc- 
cessor. One  of  insignificant  appearance — short  and  slim,  un- 
noticeable  in  the  crowd,  but  "a  figure  at  which  one  does  not 
look  without  knowing  that  it  has  a  name" — is  de  Villele, 
whom  we  shall  quote  quite  often,  because  he  has  left  a 
profound  impression  upon  our  financial  institutions.    Another 

^  See  below  this  chapter  for  the  description  of  the  central  adminis- 
tration of  finances,  of  revenue  officers  and  large  subsidiary  establish- 
ments. 

2  There  have  been  102  or  103  Ministers  of  Finance  in  France  within 
the  last  hundred  years,  counting  as  new  ministers  the  same  "incum- 
bents" in  case  of  reappointment.  In  England  we  find  during  the  same 
period,  and  using  the  same  method  of  counting,  only  36  Chancellors  of 
the  Exchequer. 

66 


THE  FRAMERS  OF  THE  BUDGET 

one  of  magnificent  stature,  sonorous  voice,  imposing  on  first 
sight,  capable  of  dealing  with  the  Iron  Chancellor  by  holding 
in  his  hand  either  the  pen  or  the  glass — this  is  Pouyer-Quertier, 
who  signed  the  Treaty  of  Frankfort;  ^  another  one  of  solemn 
demeanor,  always  ready  to  give  up  his  place  as  soon  as  opposi- 
tion manifests  itself,  dismissing  brusquely  the  solicitor  as  well 
as  the  advisor,  defending  with  an  energetic  conviction  his 
ideas  of  order  and  justice,  is  Baron  Louis;  still  another,  not 
less  imbued  with  the  same  ideas  of  order  and  economy  but 
capable  of  avoiding  difficulties  and  shocks,  of  arriving  at  his 
goal  without  confusion  and  of  defending  opportunely  the  pre- 
rogatives of  his  portfolio,  is  Pierre  Magne;  one  again,  a 
born  economist,  interrupts  joyfully  his  work  at  the  ministry, 
in  order  to  unveil  the  statue  of  Bastiat  in  some  remote  locality 
of  the  Landes;  another  succeeds  in  captivating  the  Chamber 
by  the  clearness  of  his  declarations,  the  correctness  of  his 
plans,  his  business  ability,  his  instinctive  aversion  to  dark  cor- 
ners of  the  budget ;  another,  on  the  contrary,  is  evasive,  trying 
subterfuges,  guessing  from  whence  the  wind  blows  and  fear- 
ing nothing  more  than  his  own  opinion.  The  models  can  thus 
be  varied  endlessly.  No  matter  from  what  point  of  view  one 
looks,  be  it  from  that  of  character,  eloquence,  scientific  ability, 
disinterestedness,  urbanity,  application,  special  aptitude,  etc., 
the  type,  however,  remains. 

Some  writers,  however,  have  attempted  to  present  the  Min- 
ister of  Finance  not  as  he  is,  but  as  he  should  be.  Necker, 
particularly,  has  done  this  in  a  celebrated  work  and  with  an 
insistance  which  does  not  seem  altogether  free  from  personal 
feeling.  In  1773,^  at  a  time  then  when  no  one  suspected  him 
of  ambitious  aspirations  he  was  becoming  enthusiastic  over 
the  prospect  of  the  splendors  of  his  future  position : 

"What  high  and  tremendous  power  and  privilege  it  is 
to  be  able  to  say :  All  the  sentiment  of  my  heart,  all  my 
thoughts,  every  moment  of  my  life  can  harm  or  benefit 
twenty  millions  of  people  and  make  for  the  ruin  or  the 
happiness  of  the  future  race!  This  is  probably  the  great- 
est power  that  can  be  entrusted  to  human  intelligence." 


^  See  the  Article  of  Marquis  de  Gabriac,  "Souvenirs  diplomatiques, 
M.  Pouyer-Quertier  a  Berlin,"  Revue  des  deux  mondes,  February  i, 
1896. 

2  "Eloge  de  Colbert,"  prize  oration  of  the  Academic  Frangaise,  1773. 

67 


THE  BUDGET 

Necker's  So  far  as  the  qualifications  necessary  for  filling  such  a  posi- 

di'e^ub°ect  ^^^^  ^^^  concerned,  Necker  took  delight  in  enumerating  all 
those  which  he  thought  himself  to  possess.  The  list,  there- 
fore, necessarily  becomes  endless:  common  sense,  honesty, 
simplicity  of  life,  fondness  for  work,  comprehensive  view, 
grasp  of  details,  order  and  proper  distribution  of  time,  knowl- 
edge of  human  nature,  wisdom,  moderation,  etc. 

In  1784,  after  his  dismissal  from  office,  he  still  devoted 
himself  in  the  introduction  to  U administration  des  Finances 
to  an  eloquent  description  of  an  ideal  type  of  a  Minister  of 
Finance : 

"It  is  necessary  that  an  administrator  of  finance,  guided 
.  ,  by  his  genius,  while  elevating  himself  to  the  most  lofty 

J  ideals,  must  often  by  painful  contrast  devote  himself  to 

^  most  laborious  work ;  he  must  pry  into  details ;  he  must 

know  their  importance  and  must  respect  them;  ^lis  cour- 
age must  help  him  to  overcome  the  usual  distaste  for  that 
kind  of  application ;  I  am  well  aware  of  the  fact  that  in 
order  to  succeed  one  must  find  oneself  well  informed  and 
never  be  distracted  by  the  charm  of  general  speculation; 
everybody,  however,  recognizes  that  generalities  are  but 
useless  abstractions  lacking  the  certainty  of  thinking  in 
detail.  ...  It  is  impossible  to  begin  the  administration 
of  finance  fully  prepared  for  the  task,  because  this  work 
is  made  up  of  such  a  large  variety  of  duties  that  there  is 
no  previous  education  in  existence  which  would  make  a 
man  entirely  qualified  for  the  position.  .  .  ."  (Necker. 
De  r administration  des  Finances  de  la  France. ) 

One  is  tempted  to  quote  in  extenso  those  pages  which  were 
most  warmly  received  by  the  contemporary  public.^ 

1  The  quotations  could,  as  a  matter  of  fact,  be  prolonged  to  quite 
an  extent  because  Necker  analyzes  one  by  one  a  long  series  of  quali- 
^cations  which  a  minister  of  finance  has  to  display  while  exercising 
his  high  functions;  in  this  analysis  Necker  often  becomes  eloquent. 
Toward  the  end,  however,  the  tone  of  his  writings  becomes  sad; 
the  author  considers  the  reverse  side  of  the  medal;  he  takes  cog- 
nizance of  the  bitter  side  of  the  position  which,  unfortunately,  cannot 
be  separated  from  its  splendor;  he  resented  more  than  anyone  else 
all  the  bitterness  of  which  he  speaks:  "If  one  arrive  at  the  goal  of 
his  desires,  the  passing  from  private  life  to  a  high  position  affords, 
as  any  change  in  life,  a  pleasant  moment.  One  still  possesses  imagi- 
nation while  the  compliments  and  attention  occupy  the  mind  and 
seem  to  guarantee  that  one  is  not  mistaken  and  that  it  is  really  hap- 

68 


THE  FRAMERS  OF  THE  BUDGET 

Thiers  has  characterized  with  a  word,  which  justly  re- 
mained famous,  the  most  important  quahty  which  a  Minister 
of  Finance  should  possess,  viz.,  ferocity.  "I  say  a  certain 
amount  of  ferocity  because  that  is  needed  to  defend  the  Treas- 
ury, which  belongs  to  the  entire  nation,  and  not  to  any  indi- 
vidual." 1 

Others  have  compared  the  Minister  of  Finance  to  a  "bull-  A"  English 
dog  lying  on  a  strong  box" ;  the  idea  is  the  same.    Gladstone  the"po^!tion 
said  that  the  Minister  of  Finance  resembles  a  man  who  is 
obliged  to  travel  over  a  road  leading  through  a  thicket  full 

piness  that  has  arrived.  Finally,  one  is  left  alone  in  his  cabinet. 
But  then  work  and  worry  sit  at  one's  elbow.  Clerks  preceded  by 
immense  portfolios  come  in  one  after  the  other,  bringing  with  them 
the  worries  of  business.  The  entire  brilliant  experience  of  the  start 
changes  into  a  succession  of  demands,  the  satisfying  of  which  is 
impossible;  then  comes  tumultuous  noise  and  the  few  words  of 
gratitude  are  hardly  audible  among  the  mass  of  complaints  and 
murmurs." 

Necker  concludes  with  the  following  philosophical  phrase:  "Sweet 
and  peaceful  souls,  do  not  desire  high  positions  if  you  want  to  have 
serene  days  and  pleasant  sentiments;  pick  the  pleasures  which  are 
within  your  reach ;  cultivate  the  happiness  which  you  have  tested  and 
enjoy  peacefully  the  satisfactions  the  only  enemy  of  which  is  time 
and  which  satisfactions  are  not  submitted  to  the  danger  of  violent 
\vaves  of  the  high  sea." 

'  The  text  of  Thiers'  speech  in  which  is  found  the  word  ferocity, 
which  has  since  been  repeated  often,  reads  as  follows:  "Well,  what 
1  have  to  say  about  M.  Magne  is  that  he  has  a  mind,  endowed  with 
rare  common  sense.  And  as  far  as  I  am  concerned,  I  put  an  im- 
mense value  on  this  quality  on  an  administrator  of  finances  ...  to 
this  eulogy,  however,  I  am,  if  you  permit  me  to  do  so,  going  to  add 
a  slight  reproach  (Ah!  Ah!)  but  a  very  slight  one.  I  am  not  going 
to  reproach  M.  Magne  with  the  lack  of  a  quality;  no,  I  am  going 
to  reproach  him  with  the  lack  of  a  certain  defect.  This  defect  (I  am 
looking  for  a  word  which  would  characterize  it  and  I  am  forced 
to  u^e  a  rather  strange  word,  but  I  hope  you  will  pardon  me),  this 
defect  which  M.  Magne  is  lacking  is  a  certain  amount  of  ferocity! 
(general  hilarity)  which  I  consider  indispensable  for  a  Minister 
of  Finance.  I  said  a  certain  amount  of  ferocity,  because  this  is  needed 
for  defending  the  Treasury  which  while  belonging  to  the  entire  nation 
does  not  belong  to  any  individual."  (Speech  of  Thiers,  Chamber  of 
Deputies,  May  6,  1864.) 

M.  Magne,  the  Minister  of  Finance,  whom  Thiers  questioned  thus 
ex  ahrupto,  as  a  matter  of  fact,  did  not  have  a  ferocious  character. 
He  preferred  to  win  his  cause  by  conciliatory  actions  and  his  peaceful 
disposition  yielded  him  marvelous  results.  Endowed  with  a  remark- 
able sagacity,  persuasive  eloquence  and  prepossessing  manners,  he 
succeeded  in  securing  a  legitimate  and  considerable  influence  over 
his  colleagues  and  the  Chambers. 

69 


THE  BUDGET 


The  Status 
Given  Him 
in  France 


of  ambushes,  while  holding    a    balancing    rod    in   his   hand. 

Robert  Lowe,  Chancellor  of  the  Exchequer  in  1875,  called 

him  "a  being,  created  for  producing  an  excess  of  revenues"; 

Sir  Cornwald  Lewis  describes  him  as  an  artist  in  extortion, 
/  who  can  raise  the  maximum  of  money  with  a  minimum  of 
Miscontent. 

The  Constitutional  Position  of  the  Finance  Minister:  The 
personal  merits  which  a  Minister  of  Finance  possesses,  or 
which  he  should  possess,  cannot  be  displayed  unless  a  certain 
constitutional  superiority  of  power  permits  him  to  put  them 
into  effect.  Being  responsible  for  [maintaining  a  balance  be- 
tween revenues  and  expenditures]  the  equilibrium  of  the 
budget,  he  must  defend  this  equilibrium  against  any  attempts 
on  the  part  of  the  heads  of  spending  departments.  He  could 
not  maintain  with  success  the  incessant  struggle,  and  exercise 
a  complement  of  qualities  needed  unless  he  really  possesses  a 
certain  supremacy  [in  finance  matters]  over  those  officers 
whom  he  as  a  matter  of  fact  has  to  instruct. 

In  France,  however,  according  to  the  text  of  the  Constitu- 
tion, the  Minister  of  Finance  cannot  actually  boast  any  real 
superiority  over  his  colleagues  during  the  process  of  the  prep- 
aration of  the  budget.^  The  estimates  of  each  minister  are 
transmitted  to  the  Minister  of  Finance,  as  we  have  said  above ; 
he  examines  and  summarizes  them.  This  is  a  requirement  of 
the  regulations.  The  Minister  of  Finance,  however,  does  not 
control  the  estimates.^  Article  31  of  the  Decree  of  Regula- 
tions of  May  31,  1862,  reads: 

"Every  year  the  different  ministers  prepare  the  esti- 
mates of  their  respective  departments.     The  Minister  of 

1  We  shall  see  in  the  third  part  of  this  book  that  the  Minister 
of  Finance  in  the  course  of  the  execution  of  the  budget  acquires 
a  superiority  over  his  colleagues  in  matters  of  passing  orders  for 
payment  and  of  making  payments.  In  that  connection  we  are  going 
to  recapitulate  the  functions  of  the  Minister  of  Finance  in  their 
totality. 

2  Roy,  Minister  of  Finance,  said  in  1821 :  "The  minister  of  finance 
is  by  no  means  the  general  controller  of  the  expenditures  of  the. 
various  ministries.  It  is  not  his  business  to  enter  into  the  details 
of  their  administration,  to  appraise  the  utility,  the  necessity  and 
the  urgency  of  their  expenditures  and  to  discontinue  at  his  will 
branches  of  public  service;  the  minister  of  finance  would  refuse 
to  accept  such  a  power  even  if  one  were  offered  to  him."  (Speech 
of  Roy,  Minister  of  Finance,  at  the  Chamber  of  Deputies,  July  20, 
1821.)     The  last  sentence  is  superfluous. 

70 


THE  FRAMERS  OF  THE  BUDGET 

Finance  summarizes  these  estimates  and  supplements  them 
with  an  estimate  of  revenues  in  order  to  complete  the 
general  budget  of  the  State." 

There  is  no  doubt  that  the  prerogative  of  making  the  esti-  Superior 
mate  of  revenues  as  well  as  that  of  drafting  the  budget  mes-   on^is 
sage  (''Statement   of   supporting  arguments"),  of  which  we  Position  in 
shall  speak,  constitute  very  valuable  privileges.     These,  how-   ^^^^^et 
ever,  are  not  strictly  defined  superiorities.     From  the  point  of 
view  of  the  Constitution,  the  Minister  of   Finance  has  the 
same  standing  as  the  other  ministers.    All  the  treatises  on  ad- 
ministrative law  agree  on  this  point.^ 

•  The  Minister  of  Finance,  as  we  said  above,  summarizes  the 
proposals  of  the  other  ministers;  he  examines  them,  but  has 
no  control  over  them.  At  the  most,  he  takes  the  liberty  of 
making  some  observations  and  of  calHng  attention  to  the 
fact  that,  in  order  to  preserve  the  equilibrium  of  the  budget 
an  increase  of  appropriations  cannot  be  allowed,  or  that  the 
limits  of  the  budget  of  revenues  force  him  to  insist  on  certain 
economies.^  At  different,  times  the  Minister  of  Finance  has 
written  a  circular  note  to  other  ministers  that  the  present  ap- 
propriations should  serve  as  a  strict  guide  for  the  new  budget 
and  that  any  increase  will  be  rejected.^  The  accounts  pre- 
pared each  year  by  the  Cabinets  and  communicated  to  news- 
papers contain  a  notice  similar  to  that  relating  to  the  budget  of 
1896: 

^  Consult  the  best  works  on  Constitutional  points  by  Aucoc,  Batbie, 
Laferriere,  Ducrocq.  No  indication  can  be  found  in  them  as  to 
any  provision  of  law  or  regulation  which  would  assign  to  the  Minister 
of  Finance  a  superiority  over  his  colleagues  in  matters  of  prepara- 
tion of  the  budget. 

2  Thus,  according  to  an  official  note  communicated  to  newspapers : 
"M.  Peytral  has  insisted  that  the  expenditures  for  1890  shall  not 
be  materially  higher  than  those  for  1889."  (Session  of  Cabinet  of 
February  2,   1889.) 

^  With  regard  to  the  budget  for  1893,  fo^  instance,  the  minister 
of  finance  addressed  all  his  colleagues  the  following  circular  note: 
"All  your  efforts  should  tend  to  effect  all  the  economies  which 
can  possibly  be  made  compatible  with  the  regular  course  of  the  serv- 
ice. It  is  particularly  desirable  that  the  appropriations  you  are  to 
request  for  the  fiscal  year  of  1893,  should  not  exceed  the  total  of 
appropriations  voted  by  the  Chamber  of  Deputies  for  the  fiscal  year, 
1892"  (December  31,  1891).  Immediately  afterward  the  minister 
pointed  out  with  regret  that  his  preceding  circular  note  of  last 
year,  couched  in  analogous  terms,  did  not  prevent  the  ministers  from 
including  large  increases  in  their  estimates, 

71 


THE  BUDGET 

"The  Minister  of  Finance  has  given  a  statement  of  the 
financial  situation ;  on  account  of  the  existing  situation  he 
insists  that  an  end  shall  be  put  to  all  efforts  to  increase 
the  expenditures;  he  asked  his  colleagues  to  revise  their 
proposals  strictly  so  that  the  expenditures  of  1896  should 
be  practically  the  same  as  those  of  1895."     (April  6, 

1895-) ' 

This  short  text  shows  exactly  what  may  be  called  the  po- 
sition of  the  Minister  of  Finance  who,  having  no  constitu- 
tional power  of  his  own,  tries  to  borrow  from  the  Cabinet,  so 
that  with  his  talent  for  argumentation  he  may  eventually  win 
his  cause;  this  result,  however,  is  often  but  the  result  of 
platonic  promises :  *'A11  the  ministers  have  joined  me  in  my 
views,"  relates  the  budget  message  (Statement  of  supporting 
arguments)  for  1894,  speaking  of  the  necessity  to  restrict 
the  appropriations :  "several  have  really  succeeded  in  doing 
so,"  it  adds  modestly.^ 

The  Minister  of  Finance,  in  fact,  never  acts  with  absolute 
authority;  he  does  not  think  of  being  permitted  to  demand  the 
abolition  of  some  expenditures,  to-  reject  or  to  reduce  [the 
estimates  and  requests  of]  a  certain  branch  of  service,  to  plan 
a  reform  or  an  economy  himself,  to  penetrate  into  the  de- 
tails of  the  estimates  of  his  colleagues,^  or  to  control  them  in 
the  proper  sense  of  the  word.*    The  text  of  no  law  gives  the 

1  M.  Ribot,  Minister  of  Finance,  who  was,  however,  at  this  time, 
also  the  Prime  Minister  of  the  Cabinet. 

2  Budget  message  ("Statement  of  supporting  arguments")  of  the 
budget  bill  for  1894  (May  16,  1893). 

*  The  budget  message  ("Statement  of  supporting  arguments")  often 
contained  at  the  end  of  the  comparative  table  of  expenditures  for 
the  next  fiscal  year  the  following  sentence:  "The  explanations  fur- 
nished in  estimates  of  budgets  of  every  ministry  justify  these  in  ' 
creases  in  expenditures."  The  Minister  of  Finance  refers  to  the 
personal  suggestions  made  by  each  of  his  colleagues  without  ap- 
ptopriating  for  himself  the  figures  which  do  not  belong  to  him. 
The  budget  message  (Statement  of  supporting  arguments)  of  the 
budget  for  1902  submitted  by  M.  Cailliaux  on  March  29,  1901,  con- 
tains even  the  following  sentence:  "Finally,  the  Department  of  Post 
Service,  they  say,  has  an  indispensable  need  of  an  increase  of  appro- 
priations amounting  to  6,000,000."  This  expression  "they  say"  has 
a  peculiar  meaning  when  uttered  by  a  Minister  of  Finance. 

*  It  also  happens  that  a  Minister  of  Finance  suggests  at  times  to 
some  obliging  Deputy  to  propose  to  the  Chamber  certain  economies 
which  the  Minister  of  Finance  would  like  to  see  introduced  in  the 
budgets  of  his  colleagues. 

_    72        .     . 


THE  FRAMERS  OF  THE  BUDGET  . 

Minister  of  Finance  this  control  and  he  can  exercise  it  only 
by  usurping  it. 

Even  in  case  the  Minister  of  Finance  is  at  the  same  time 
the  Prime  Minister  of  the  Cabinet,  a  condition  which  occurs 
at  times,  his  powers  with  regard  to  the  preparation  of  the 
budget  remain  as  above  described.  Thus,  the  Minister  of 
Finance  of  the  Cabinet  in  the  year  1894-5,  said  to  the  Cham- 
l)er  of  Deputies: 

"Suppose  you  were  engaged  jointly  with  the  Govern- 
ment in  preparing  the  budget  for  1895.  ^^  ^^e  here 
as  a  Cabinet  of  ministers ;  the  Minister  of  Finance,  as  is 
his  duty,  recommends  to  all  of  his  colleagues  to  try  to  re- 
duce the  expenditures  within  the  limits  of  possibility  and 
even  of  impossibility."    (Session  of  December  4,  1894.) 

In  spite  of  his  predominant  position,  the  Minister  of  Fi- 
nance limits  himself  always  to  reserved  recommendations. 

In  What  Respect  Superior  to  Other  Ministers:  In  a  word, 
the  only  superiority  which  the  Minister  of  Finance  in  France 
possesses  over  the  other  ministers  in  the  matter  of  the  prepa- 
ration of  the  budget,  consists  of: 

1.  Summarization  of  the  estimates  and  expenditures. 

2.  Exclusive  preparation  of  the  estimates  of  revenues. 

3.  Drafting  of  the  budget — the  "statement  of  supporting 
arguments"  accompanying  the  financial  bill — ^and  presenting 
it  to  the  Chambers.^  -| 

It  has  not  always  been  so.  In  former  times  Sully,  Superin- 
tendent of  Finance,  exercised  effective  domination  over  all 
parts  of  the  administration;  to  his  finance  functions  were 
added  in  succession  the  functions  of  the  Grand  Master  of 
Artillery,  of  the  Superintendent  of  the  Fleet,  and  those  of 
Chief  Road  Superintendent  of  France;  he  became  also  the 
Governor  of  the  Bastille,  Ambassador  to  England,  etc.  As 
Minister  of  Finance,  he  centralized  the  administration  of  all 

^  One  might  add  a  fourth  item :  Affixing  in  certain  cases  his  ob- 
ligatory counter  signature  on  all  the  pledges  of  expenditures  proposed 
by  his  colleagues  (Article  39  of  the  decree  of  May  31,  1862).  This 
last  point,  however,  diverges  from  the  budget,  properly  speaking,  and 
becomes  part  of  the  subject  treated  in  Chapter  XXV  which  is  devoted 
to  the  expenditures  and  preventive  control  over  the  execution  of 
the  budget.  We  are  referring  to  this  chapter  for  the-  study  of  the 
attributes  of  the  Minister  of  Finance  in  their  totality. 

73 


Under 
Jean- 
Baptiste 
Colbert 


THE  BUDGET 

other  branches  of  the  service.     His  Memoirs,  after  having 
treated  the  question  of  finance,  continue  as  follows: 

"As  to  what  is  relating  to  my  other  offices  .  .  /* ;  then 
comes  his  statement  of  what  he  had  done  for  the  con- 
struction and  armament  of  galleys,  "work  which  the  King 
praised  very  highly,"  for  ships,  for  harbors  and  the  coast 
of  Brittany,  for  the  police,  for  the  Army,  for  the  diplo- 
macy and  for  the  Parlements. 

Due  to  this  concentration  of  power,  all  expenditures  were 
influenced  by  his  desire  for  economy;  order  was  established 
in  the  public  finances  and  21,000,000  francs  in  cash  were  ac- 
cumulated in  the  Treasury  of  the  Bastille. 

Jean-Baptiste  Colbert,  Comptroller  General  from  1 661-1683, 
centralized  in  totality,  or  partially,  the  functions  of  seven  of 
our  present  ministries.^  His  correspondence  ^  shows  that  the 
affairs  of  these  seven  ministries  were  in  reality  directed  by 
him  and  that  he,  being  the  master  of  the  funds,  was  at 
the  same  time  through  these  funds  master  of  men  and  af- 
fairs. 

This  correspondence  fills  seven  volumes  in  quarto,  the  fol- 
lowing divisions:  finances,  taxes,  mint,  industry,  commerce, 
marine,  galleys,  colonies,  provincial  administrations,  agricul- 
ture, stud  farms,  forests,  roads,  canals  and  mines,  fortifica- 
tions, sciences,  literature  and  fine  arts,  justice  and  police,  re- 
ligious matters.  This  shows  conclusively  that  the  administra- 
tion of  the  country  rested  in  reality  with  the  party  holding 
the  keys  to  the  Treasury. 


^  "After  the  death  of  Mazarin,  Colbert  was  appointed  in  succession, 
Superintendent  of  Finance,  Superintendent  of  Marine,  Comptroller 
General  and  Secretary  of  State,  having  in  his  department  the  Navy, 
Commerce  and  the  Industries  .  .  .  between  1661  and  1672  the  power 
and  the  credit  of  Colbert  were  practically  without  limits :  codes,  regu- 
lations, ordinances,  all  bear  the  marks  of  his  influence  and  all  were 
issued  by  him.  Governorships,  ambassadorships,  bishoprics,  presi- 
dencies, superintendencies ;  in  a  word,  the  highest  positions  were 
distributed  only  upon  his  recommendation  ...  he  worked  sixteen 
hours  per  day  during  the  time  he  was  minister  ...  he  knew  no  rest 
other  than  the  rest  which  consisted  in  changing  the  subject  in 
hand"  (Pierre  Clement.  Histoire  de  la  vie  et  de  I' administration  de 
Colbert,  1846). 

2  The  correspondence  of  Colbert  has  been  published  through  the 
efforts  of  Messrs.  Pierre  Clement  and  de  Boislisle  under  the  title 
Lettres,  instructions  et  memoires  de  Colbert. 


P<4 


THE  KRAMERS  OF  THE  BUDGET 

"Until  1670,"  says  Montyon,  "Colbert  was  the  all-pow- 
erful Minister  and  master  of  the  court."  Later  Louvois 
contended  for  the  first  place.  "But,"  adds  Montyon,  "in 
the  first  period  we  see  M.  Colbert  invade  all  the  depart- 
ments and  pretend  to  subordinate  politics  to  the  interests 
of  commerce  and  finance,  interfere  with  military  mat- 
ters, uniforms,  armament,  marching  and  camping  of 
troops,  and  prepare  a  plan  for  the  organization  of  judici- 
ary. There  is  not  one  branch  of  government  to  which  he 
would  not  extend  his  supervision." 

As  Montyon  has  stated,  Colbert  articulated  everything  with 
the  question  of  finance,  which  meant  that  he  based  his  au- 
thority on  his  position  of  Comptroller  General  and  disburser 
of  the  funds,  and  he  correlatively  used  this  authority  to  in- 
sure regularity  and  economy  in  all  branches  of  the  adminis- 
tration.^ The  moment  he  loses  this  supreme  power  the  public 
finances  are  in  jeopardy. 

"In  the  second  stage,"  Montyon  continues,  "Colbert  no 
longer  has  control  over  the  departments  of  other  min- 
isters and  front  that  time  on  he  is  not  the  master  even  of 
his  own  department.  He  has  not  the  same  power  to  stay 
the  torrent  of  expenditure  caused  by  war,  shipbuilding, 
festivities,  etc."  (Particnlarites  et  observations  stir  les 
Ministres  de  Finance,  by  Montyon. ) 

Necker  would  have  liked  very  much  to  revive  for  his  own  Under 
benefit  the  far-reaching  powers  of  Colbert.  In  pronouncing  ^^^^^^ 
his  well-known  eulogy,  which  was  awarded  the  prize  by  the 

^  Thus  in  his  memorandum  for  the  king  in  1669,  Colbert  spon- 
taneously suggested  to  the  king  to  reduce  the  expenditures  of  the 
marine  by  two  million  livres,  the  expenditures  of  the  Navy  by  three 
millions,  the  expenditures  of  the  Army  by  one  million  and  the 
expenditure  on  fortifications  by  two  millions.  On  the  contrary,  how- 
ever, he  wanted  to  grant  to  commercial  companies  an  increase  of 
one  million. .  In  a  previous  memorandum,  July  22,  1666,  in  various 
chapters  under  the  following  titles,  "Marching  of  troops  in  the  inte- 
rior of  the  kingdom  and  assembling  of  army  corps"  and  "that  the 
officers  keep  the  pay  of  their  soldiers,"  he  treats  the  most  technical 
military  questions  having  an  eye  single  on  reforms  which  would 
benefit  the  budget.  "As  far  as  I  am  personally  concerned,"  he  wrote 
the  King,  "I  must  declare  to  your  Majesty  that  a  useless  repast  cost- 
ing thousands  of  ecus  gives  me  an  incredible  pain.  .  .  ."  Madame  de 
Maintenon  used  to  say:  "Colbert  thinks  of  nothing  but  his  finances, 
and  hardly  ever  about  religion." 

75. 


THE  BUDGET 

Academic  in  1773,  he  took  care  to  show  the  good  results 
growing  out  of  the  supremacy  of  the  Minister  of  Finance  over 
the  general  administration  of  the  country.  After  having  been 
appointed,  however,  to  the  Comptrollership  General  in  1778, 
he  failed  in  his  attempts  to  absorb  other  branches  of  the 
service. 

"When,  carried  away  by  my  zeal  and  by  the  hope  of 
realizing  great  economies,"  he  wrote  later  on,  "I  desired 
to  be  given  supervision  over  all  the  contracts  relating  to 
the  departments  of  war  and  marine,  my  demand  was  in- 
terpreted as  an  abnormal  fondness  for  authority  and 
power." 

The  most  he  achieved  was  that  the  Treasurers  General  for 
the  War  Department,  the  Marine  Department,  the  Depart- 
ment of  Roads  and  Bridges  and  of  the  Households  of  Their 
Majesties,  were  ordered  to  submit  henceforth  their  accounts 
to  the  public  Treasury.  Necker  had  to  use  great  effort  to 
subordinate  financially  these  outside  accountable  officers. 
"Without  this  subordination,"  he  says  in  the  introduction  to 
his  edicts  of  reform,  "the  particular  interest  which  the  ad- 
ministration of  finances  has  to  take  in  economies  becomes  use- 
less in  the  service  of  the  King."  Necker  did  not  even  have 
access  to  the  Conseil  d'Etat  of  the  King.  As  a  result  of  the 
refusal  of  this  prerogative,  which  occurred  in  1781,  he  had 
to  retire,  as  he  considered  the  aforesaid  prerogative  indis- 
pensable in  the  performance  of  his  functions.^ 

During  the  following  century  few  examples  are  found 
which  can  be  compared  with  Sully  and  Colbert.  Between 
1799  and  181 5,  however,  the  entire  administration  of  finances 
was  entrusted  to  two  ministers,  the  Minister  of  the  Treasury 
and  the  Minister  of  Finance — in  reality,  to  Napoleon,  who 
was  the  real  Minister  of  Finance  during  his  reign.  While 
ruling  the  Armies,  the  marine,  the  general  administration,  the 
police,  etc.,  with  absolute  power  he,  together  with  Gaudin  ^ 

^  "I  thought  that  an  administrator  of  finances,  responsible  upon 
his  honor  for  the  resources  of  the  country,  should,  for  the  benefit 
of  the  State,  be  admitted  to  the  deliberations  on  war  and  peace." 
(Introduction  de  V administration  des  finances.) 

2  "The  Emperor  himself  examined  the  various  elements  of  the 
budget  and  devoted  particular  care  to  its  formation.  He  verified 
the  statements  of  appropriations  submitted  to  him  by  his  ministers, 
taking    up    article   by    article,   particularly   those    referring   to    the 

76 


THE  KRAMERS  OF  THE  BUDGET 

and  Mollien/  from  day  to  day  settled  questions  of  finance — 
decided  on  the  establishing  of  new  resources,  ordered  the 
transfer  of  funds  and  the  distribution  of  appropriations  and 
presided  in  person  over  the  organization  work  of  the  Sink- 
ing Fund,  Cadastral  Survey,  the  Cour  des  Comptcs,  etc.  The 
public  finances  were  greatly  benefited  by  this  concentration  of 
the  machinery  of  control  in  the  powerful  hands  of  the  Em- 
peror; the  condition  of  the  finances  had  constantly  improved 
from  the  year  VIH  of  the  French  Republic  until  the  down- 
fall of  the  regime  itself. 

Under  the  Restoration,  M.  de  Villele  occupied  the  position 
of  Minister  of  Finance  for  almost  five  and  a  half  years,  be- 
ing at  the  same  time  the  Prime  Minister.  This  presidency  of 
the  Cabinet,  effectively  exercised  and  coupled  with  the  lawful 
predominance  which  it  involved,  permitted  him  to  accomplish 
important  and  lasting  reforms  in  financial  matters.  Traces  of 
his  reforms  will  be  found  everywhere  in  a  study  of  budget 
procedure,  because  the  foundation  proper  of  parliamentary  After  the 
accounting  dates  from  his _commg  into  office,  ft  was  he  who  ^aoole 
established  the  uniformity  of  blanks  and  the  subordination  of 
all  accounts  to  regulations  issued  by  the  Minister  of  Finance ; 
he  defined  the  various  duties  imposed  upon  the  officers,  pro- 
departments  of  war  and  of  marine.  The  great  public  works  caused 
profound  discussions  between  the  engineers.  The  Emperor  who 
assisted  at  these  discussions  indicated  the  most  urgent  work  and 
determined  the  appropriations  which  he  decided  to  make  for  this 
work  during  a  particular  year.  Then,  after  the  total  figure  of  the 
expenditure  was  determined,  the  Minister  of  Finance  discussed  the 
ways  and  means  with  the  Emperor.  .  .  ."  (Memoires  of  Gaudin, 
Duke  of  Gaeta.)  At  the  time  when  the  Cour  des  Comptes  was  or- 
ganized, the  Emperor  said  to  his  Minister  of  Finance  as  follows: 
"See  before  all  that  this  organization  be  such  that  any  cognizance 
of  abuses  ascertained  by  the  Cour  des  Comptes  must  necessarily 
reach  me." 

^  Mollien  in  his  Memoires  d'un  Ministre  du  Tresor  states  that 
as  director  of  the  Sinking  Fund  he  had  to  submit  every  day  person- 
ally a  report  to  the  First  Consul  on  the  financial  events  of  the  day. 
He  remembers  that  in  January  1806  Napoleon  himself  settled  the 
question  of  agents  and  dismissed  Barbe-Marbois.  As  soon  as  ap- 
pointed minister  Mollien  constantly  received  notes  from  the  Emperor 
in  which  the  latter  pointed  out  new  needs  and  discussed  means  of 
providing  for  them,  with  "this  passion  for  details  which,  combined 
with  the  most  grandiose  views  of  the  total,  was  the  subject  of  constant 
amazement  to  his  ministers." 

The  Correspondence  de  Napoleon,  moreover,  shows  on  every  page 
that  the  effective  and  detailed  management  of  finances  in  reality 
rested  with  the  Emperor. 

77 


THE  BUDGET 

viding  for  the  exercise  of  control  over  all  agents  who  handled 
funds  and  vouchered  expenditures;  he  furthermore  worked 
out  the  provisions  set  forth  in  his  celebrated  ordinances  of 
1822,  1823,  1824  and  1827.^  In  order  to  achieve  such  results, 
he  had  to  overcome  much  opposition,  compel  many  against 
their  will,  abolish  red  tape,  combat  abuse — in  a  word  to  wield 
at  all  times  the  exceptional  authority  vested  in  the  prominent 
position  he  occupied.^ 

Since  de  Villele,  the  premiership  of  the  Cabinet  has  been  at 

^  De  Villele  became  Minister  of  Finance  on  December  15,  1821,  and 
Prime  Minister  on  December  7,  1822;  resigned  January  4,  1828. 

2  The  list  of  the  main  measures  of  financial  organization  which 
were  inaugurated  under  the  administration  of  de  Villele  reads  as 
follows : 

In  1822  he  pulled  the  budget  out  of  the  mire  of  temporary  arrange- 
ments, a  thing  which  none  of  his  predecessors  since  1815  had  been 
^  ^        able  to  do.     He   forced  the  officials  to  submit  to  the  taxpayers  in 
support  of  the  ordinances  and  tax  assessments  all  the  documents  justi- 
fying tbe  expenditures  (Ordinance  of  September  14,  1822).    He  fixed 
"2^  'the  time  for  the  liquidation  and  for  the  finding  of  orders  for  pay- 
ment of  expeditures  and  established  a/  time  limit  for  the  duration  of 
the   fiscal   period.     He   prohibited   the-  ministers    from   making   any 
>  ihtiirect  increases  of  appropriations  by  means  of  resources  of  which 
they  had  control.     He  introduced  uniform  blanks  for  the  adminis- 
trator in   all  branches   of  the   service  and   forced  the   ministers  to 
submit  annually  statements  showing  the  consecutive  application  of 
their   appropri^ons.     (Idem.)      He   put   the   Cour  dcs  Comptes  in 
,  I         charge  of  verifying  each  year  the  accounts  submitted  by  the  min- 
"■  isters.     He  entrusted  to  a  special  commission  the  care  of  enforcing 

the  conformity  of  statements  submitted  by  the  Minister  with  the 
blanks  and  forms  used  by  the  General  Accounting  Office  (Ordinance 
of  September  10,  1823).  He  again  attached  the  Directors  General  of 
Financial  Excise  Offices  to  the  Ministry  of  Finance  in  spite  of  their 
desire  for  independence  and  he:  unified  the  work  of  the  General 
^A  Accounting  Office  and  of  the  Treasuries  (Ordinance  of  November  4, 

f>  ^  V-'     1824).     He  determined  the  form  of  accounts  submitted  by  the  min- 
V         ^ty^^  isters  which  had^to  be  controlled  by  the  Cour  des  Comptes  and  he 

>  \^  originated  summary  statements  arranged  by  classes  of  accounts  in 

.0  order  to  facrltlate  the  control  and  to  render  it  more  effective  (Ordi- 

nance of  July  9,  1826),  He  also  specialized  the  annual  vote  on  the 
budget  by  sections  of  the  ministries  (Ordinance  of  September  i, 
1827). 

The  ordinances  of  September  14,  1822,  December  10,  1823,  Novem- 
ber 4,  1824,  and  September  i,  1827,  constitute  the  so-called  famous 
ordinances  of  de  Villele  and  we  shall  meet  them  again  and  again.  A 
study  of  the  work  done  by  Commissions  which  preceded  the  drafting 
of  some  of  these  ordinances,  reveals  the  resistance  which  they  met.  If 
(  it  had  not  been  for  the  personal  authority  of  the  Prime  Minister, 
\  these  ordinances  would  hardly  have  gone  into  effect. 

78 


THE  FRAMERS  OF  THE  BUDGET 

different  times  in  the  hands  of  the  incumbent  of  the  portfolio 
of  finance,^  which  fact,  however,  as  we  have  said  above,  did 
not  increase  the  attributes  of  the  Minister  of  Finance  with 
regard  to  the  budget. 

Finally,  after  1 870-1 871,  the  genius,  activity  and  patriotism 
of  Thiers,  then  Chief  Executive,  made  him  a  minister  with  a 
general  commission.  He  penetrated  into  all  branches  of  the 
administration,  particularly  into  the  administration  of  war, 
commerce  and  finance,  in  order  to  deal  personally  with  impor- 
tant as  well  as  minor  questions.  Jules  Simon  writes:  *Tt 
is  hardly  necessary  to  say  that  nothing  happened  without  his 
knowledge  in  the  Ministry  of  War  as  well  as  in  the  Ministry 
of  Finance."  ^  The  personal  authority  of  the  Minister  of  Fi- 
nance suffered  unquestionably  through  this  usurpation.  But 
the  liberation  of  the  country,  the  successful  national  loan  of 
5,000,000,000  francs  for  the  payment  of  the  war  indemnity 
and  the  creation  of  taxes  necessary  for  the  reestablishment  of 
the  Equilibrium  [the  balance  l^etween  revenues  and  expendi- 
tures] wBich  resulted  from  the  conferences  held  at  Versailles 
by  the  managers  of  different  branches  of  financial  service 
under  the  personal  chairmanship  of  the  chief  of  the  executive 
power — these  events  caused  questions  of  finance  to  over- 
shadow all  others.  And  with  this  supremacy  the  chief  execu- 
tive of  the  Republic  was  able  to  subordinate  all  other  minis- 
terial interests  to  the  exigencies  of  the  budget. 

Under  the  Second  Empire,  by  virtue  of  the  Constitution   Under  the 
of  1852,  the  Conseil  d'Etat  (Council  of  State),  in  the  prepa-  Second 
ration  of  the  budget,  received  the  plan  of  the  budget  from  the     "™P'^^ 
Minister  of  Finance  before  it  was  submitted  to  the  legisla- 
tive body,  so  as  to  enable  the  Council  to  study  and  to  control 
it  in  the  proper  sense  of  the  word.    Each  section  of  the  budget 
plan  corresponded,  as  we  know,  to  a  ministry,  and  showed  in 
this  way  the  source  of  authority. 

The  Conseil  d'Etat  had  the  right  to  devise,  amend  and  mod- 
ify at  will  the  initial  plan;  in  practice,  however,  it  necessarily 
availed  itself  of  this  right  with  much  reserve.^    The  drafting 

^  Rouvier  in  1887  and  in  1904-5 ;  Tirard  from  December  12,  1887, 
to  April  3,  1888;  Ribot  from  January  26,  1895,  to  November  i,  1895. 

2  Jules  Simon  adds  as  follows:  "The  Ministry  of  Justice  and  the 
Ministry  of  Public  Instruction  and  of  Worship  were  the  only  ones 
into  the  details  of  which  he  never  entered." 

^  The  Minister  of  F'inance  has  often  criticized  with  reserve  the 
budgets  of  his  colleagues  before  the  Conseil  d'Etat  in  order  to  obtain 

79 


THE  BUDGET 

of  the  budget  message  fell  to  the  Conseil  d'Etat  and  a  number 
of  its  members,  designated  by  the  Emperor,  supported  the 
budget  bill  before  the  Chambers. 

This  organization  was  later  deemed  incompatible  with  the 
parliamentary  regime,^  and  the  law  of  May  24,  1872,  rees- 
tablishing the  Conseil  d'Etat  after  the  war,  did  not  deem  it 
necessary  to  restore  its  ancient  attributes  with  regard  to  the 
budget;  indeed  no  legislative  attributes  were  left  to  this  body 
[except  that  of  consultation,  when  this  is  desired  by  one  of 
the  Chambers]. 

Organization  of  the  Ministry  of  Finance  in  France:  The 
Minister  of  Finance,  regardless  of  type,  in  order  to  stand  out 
clearly,  needs  to  be  the  head  of  an  administration.  He  is  an 
entity  whose  existence  is  bound  up  with  that  of  his  ministry. 

Two  Groups  of  Agencies:  The  Central  Administration  of 
Finances  in  France  ^  is  divided  into  two  distinct  branches : 
I.  [Advisory  and  Staff]  Services  immediately  under  the 
Minister  of  Finance.  2.  Divisions  of  Excise  {regie)  ad- 
ministrations. The  two  branches  are  located  side  by  side  in 
the  buildings  of  the  Louvre,  and  both  are  regulated  by  de- 
crees putting  into  effect  the  law  of  December  29,  1882.  The 
personnel  [under  the  ministry  in  both  branches]  numbers 
about  1,800  officers,  agents  and  subordinate  employees. 

Character  of  Advisory  and  Staff  Divisions 

Among  the  [advisory  and  staff]  services  immediately  under 
the  Minister  of  Finance,  the  aforesaid  decrees  and  the  tables 
of  the  budget  show  the  following  ten  categories:  Cabinet  of 
the  Minister  of  Finance;  division  of  personnel  and  materials; 
division  of  control  of  bureaus  of  finance  administration ;  divi- 
sion of  general  supervision  of  finance;  division  of  transfer 
(supervising  movement  of  cash)  ;  division  of  public  account- 
ing; division  of  the  funded  debt;  division  of  the  legal  bureau 
of  the  Treasury  and  of  disputed  claims ;  division  of  the  central 

from  this  assembly  a  reduction  in  expenditures,  which  he  himself 
was  unable  to  bring  about. 

1  "A  free  constitution  does  not  permit  the  existence  of  this  insti- 
tution as  a  branch  of  the  legislative  power." 

2  See  Chapters  XIX,  XX,  XXI  and  XXII  in  the  part  dealing  with 
the  execution  of  the  budget  for  what  relates  to  local  administration. 
In  this  connection,  only  the  central  administration  is  described. 

80 


THE  KRAMERS  OF  THE  BUDGET 

cash  office  of  the  public  Treasury;  division  of  central  control 
of  the  public  Treasury. 

There  are  nearly  1,300  officers  and  agents,  beginning  with 
directors  general,  directors,  deputy  directors,  chiefs  and  dep- 
uty chiefs  of  bureaus,  clerks  of  all  grades,  down  to  non-com- 
missioned agents,  agents  of  the  interior  service,  office  agents, 
etc.,  who  compose  the  personnel  of  this  first  category. 

^  Divisions  Not  Directly  Used  in  Preparing  the  Budget: 
Each  of  the  [advisory  and  staflf]  services,  however,  which  is 
immediately  under  the  minister  as  enumerated  above,  has  a 
very  unequal  importance,  particularly  with  regard  to  the  prep- 
aration of  the  budget.  Let  us  eliminate,  at  once,  all  those 
divisions,  the  activities  of  which  have  no  direct  relation  to  our 
subject.  [The  five  to  be  eliminated  are  the  cabinet  of  the 
Minister  of  Finance ;  the  divisions  of  personnel  and  materials, 
the  cash  office;  the  division  of  the  funded  debt;  and  the  divi- 
sion of  the  legal  bureau.] 

The  cabinet  of  the  Minister  of  Finance  and  the  division  of 
personnel  and  materials  can  be  found  in  almost  identical  form 
in  all  the  ministries.^  It  is  sufficient,  therefore,  to  enu- 
merate them. 

The  head  paying-cashier  of  the  public  Treasury  in  Paris 
performs,  with  a  number  of  exceptions,  the  same  functions  as 
the  general  paying-cashiers  in  the  departements,  of  whom  we 
shall  speak  later. 

The  administration  of  the  funded  debt  is  limited  to  its 
special  functions,  which  consist  of  registering,  transferring 
and  reissuing  bonds ;  preparing  the  liquidating  orders  and  the 
entries  in  the  ledger  for  pensions  of  the  State;  entering  in 
the  ledger  the  surety  bonds  of  the  bookkeepers  and  other 
officers  and  of  preparing  extracts  from  these  entries — in  a 
word,  this  administration  is  exclusively  in  charge  of  all  mat- 
ters concerning  securities  and  accounts  of  overdue  annui- 
ties, pensions  and  surety  bonds. 

The  function  of  the  division  of  the  legal  bureau  of  the 
Treasury  consists  of  the  following  four  activities:  (i)  Ad- 
vising the  Minister  of  Finance  in  all  litigious  matters  in 
which  the  responsibility  of  the  State  is  involved;  (2)  con- 
ducting proceedings  for  collecting  all  debts  and  all  outstand- 

^  The  cabinet  of  the  minister  in  the  ministry  of  finance,  in  addi- 
tion to  its  advisory  relation,  has  a  special  administrative  function — 
the  granting  of  licenses  for  selling  tobacco. 

81 


THE  BUDGET 

ing  claims  of  which  the  Treasury  is  the  creditor;  (3)  repre- 
senting the  Treasury  before  the  Courts;  (4)  safeguarding  the 
interests,  rights  and  privileges  of  the  Treasury  in  matters  re- 
lating to  surety  bonds,  legal  mortgages,  attachments,  litiga- 
tions, etc. 


Division  of 

Public 

Accounting 


Preparation 
of  Budget 
and  Finance 
Bills 


Preparation 
and   Publi- 
cation of 
Financial 
Statements 


Staff  Divisions  Directly  Involved:  The  a1x)ve  described 
services,  although  undoubtedly  of  very  great  intrinsic  im- 
portance, only  incidentally  have  to  do  with  the  preparation  of 
the  budget  by  the  Ministry  of  Finance.  In  this  we  have  to 
deal  only  with  the  division  of  public  accounting,  the  division 
of  transfer,  and  the  division  for  control  of  offices  or  bureaus 
of  excise  administrations. 

The  ''Division  of  Public  Accounting,"  says  Article  372  of 
the  Decree  of  May  3K  1862,  has  ''charge  of  making  regula- 
tions for  the  accounting^rrf-^ptiblic  funds  and  of  maintaining  in 
each  branch  of  the  service  a  uniform  system  of  blanks";  this 
definition,  however,  is  not  quite  complete,  because  this  is  only 
one  of  the  many  phases  of  public  accounting  which  contains 
the  following  four  functions: 

1.  Preparing  of  financial  bills,  budgets,  statements,  memo- 
randa on  supplementary  appropriations,  etc.  If  in  the  pages 
of  this  book  we  shall  speak  of  the  Minister  of  Finance  as 
the  one  who  prepares  these  various  documents,  it  must  be 
understood  that  he  does  it  through  the  division  of  public  ac- 
counting. Article  374  of  the  Decree  of  May  31,  1862,  reads 
as  follows:  "The  division  of  general  accounting  has  charge 
of  the  preparation  of  the  general  budget  of  the  State,  of  the 
law  regulating  every  fiscal  year  and  of  the  several  laws  in- 
volving allowances  of  extra  appropriations." 

2.  Publication  of  official  statements,  of  the  final  state- 
ment of  revenues,  of  the  general  statement  of  finances,  the 
general  situation  as  to  collecting  taxes,  etc.  The  division  of 
public  accounting  which  has  charge  of  keeping  the  journal 
and  the  ledger  {grand  livre)  of  financial  operations  is  the 
only  one  which  is  able  to  make  an  abstract  of  official  figures. 


-^ 


') 


S 


"The  general  statements  of  the  year  and  of  the  rev- 
enues and  expenditures,  the  regulations  concerning  the 
budget,  and  a  statement  of  the  financial  situation  which 
has  to  be  published  in  accordance  with  the  laws,  are  made 
on  the  forms  prescribed  by  the  division  of  general  ac- 
counting."   (Article  373  of  the  Decree  of  May  31,  1862.) 

82 


THE  KRAMERS  OF  THE  BUDGET 

3.  Administration  of  the  records  and  reports  required  of   Administra- 
all  accountable  officers,  treasurers  general,  receivers  of  taxes,   ^°"  °^  . 
agents  of  excise  offices;  also  accountants  not  subordinated  to 

the  ministry  of  finance,  in  conformity  with  Article  372,  men- 
tioned above;  consolidation  of  the  statements  of  expenditures 
which  have  to  be  transmitted  to  the  Minister  of  Finance  by 
the  latter's  fellow-ministers  in  .compliance  with  the  law  of 
December  26,  1890.  The  Decree  of  May  16,  1863,  inten- 
tionally gave  to  the  old  institution  of  ''General  Accounting" 
the  title  of  General  Administration  of  Public  Accounting 
in  order  to  emphasize  the  fact  that  the  institution  should  extend 
its  activity  to  all  accounting  functions  in  which  the  admin- 
istration of  public   funds  is  concerned. 

4.  Administration  of  the  special  service  charged  with  the  Collection 
duty  of  collecting  direct  taxes.  The  collectors  acting  under  ^  Direct 
the  authority  of  the  division  of  public  accounting  collect  the 

taxes  according  to  lists  prepared  by  the  office  of  general  ad-|\ 
ministration  of  direct  taxes,  which  is  described  later  on  among 
the  excise  offices.     The  municipal  tax  collectors,  hospital  es- 
tablishments, etc.,  are  placed  under  the  same  administration. 

These  are  in  their  essential  parts  the  four  principal  func- 
tions of  the  division  of  public  accounting. 

The  "Division  of  Transfer"  [supervision  of  the  movements  Division  of 
of  cash]  has  charge  of  regulating  the  flow  of  cash  through  Transfer— 
the  several  public  treasuries  and  does  not  limit  itself,  as  does 
the  division  of  public  accounting,  to  simply  registering  the 
receipts  and  disbursements.  The  division  of  transfer  has  as 
its  special  function  to  distribute  revenues  so  as  to  meet  ex- 
penditures throughout  the  state.  'This  division  performs  to 
some  extent  the  same  functions  in  the  administration  of 
finances  as  the  heart  does  in  a  human  l3ody.  It  keeps  up  and 
regulates  the  circulation  of  the  blood,  that  is,  the  money  in 
the  body  of  the  state,"  says  Mr.  Richard  Kaufifman. 

It  has  always  been  a  favorite  way  to  use  comparison  in 
order  to  define  the  general  transfer  of  funds.  Some,  instead 
of  employing  the  analogy  of  the  heart,  have  used  the  figure 
of  the  banker  who  has  charge  of  furnishing  money  where 
there  is  a  shortage  and  who  husbands  it  when  there  is  an 
excess;  this  comparison,  however,  is  not  exact.  Others  have 
compared  it  to  a  compensating  pendulum  because  it  counter- 
balances the  expenditures  by  the  revenues  through  a  constant 
motion.     Let  us  draw  from  these  illustrations  three  points: 

I.    Distribution  of  funds:  this  means  the  applying  of  rev- 

83 


THE  BUDGET 


Distribution 
of  Funds 


Finding 

Supplement 

Revenues 


enue  to  the  expenditures,  throughout  the  territory  of  the  State, 
a  function  of  which  we  have  spoken  above  and  which  is  con- 
summated through  the  following  operations:  (a)  keeping  of 
current  accounts  of  treasurers  general,  in  whose  hands  are 
centralized,  for  the  disposal  of  the  Treasury,  all  the  funds 
collected  by  its  agents;  (b)  monthly  distribution  of  funds, 
pursuant  to  authority  granted  in  anticipation  of  the  needs  of 
various  ministries;  (c)  vise  of  ministerial  orders  issued  within 
the  limits  of  legislative  appropriations,  and  of  decrees  or 
authorities  for  monthly  distribution,  which  is  followed  by  the 
sending  of  the  designated  amounts  to  the  proper  disbursing 
officers.  These  details  will  be  described  more  completely  in 
Chapters  XXII  and  XXIV. 

2.  Creating  of  new  sources  of  revenue  in  case  of  insufficient 
current  revenues:  Not  only  may  some  cash  in  hand  become 
necessary  for  a  temporary  reestablishment  of  an  equilibrium 
between  the  movement  of  revenues  and  the  movement  of  ex- 
penditures, but  it  often  happens  that  the  total  of  revenues  of 
one  year  turns  out  finally  to  be  lower  than  the  total  of  ex- 
penditures. Moreover,  extraordinary  events  sometimes  oc- 
cur, such  as  war,  disasters,  liquidation  of  arrears,  large  pub- 
lic works,  etc.  It  rests,  therefore,  with  the  division  of  transfer 
to  meet  these  different  needs  by  issuing  treasury  bonds,  by 
resort  to  floating  debt,  by  executing  different  treasury  opera- 
tions, by  making  collateral  loans,  or  by  making  other  uses  of 
the  credit  of  the  State.  The  division  of  transfer  must  at  the 
same  time  anticipate  what  funds  will  be  required  and  provide 
them.  This  is  one  of  the  most  delicate  phases  of  its  task. 
A  former  director  has  thus  stated  the  difficulties  which  he 
encountered  during  the  year  1883 : 

*The  division  of  transfer  must,  as  you  know,  contrive 
through  financial  expedients  at  its  disposal  to  meet  tem- 
porary deficiencies  of  revenue  and  must  at  the  same  time 
provide  for  making  available  all  the  revenues  to  meet  any 
form  of  expenditure  wherever  the  need  arises,  for  which 
the  regular  and  normal  revenues  of  the  budget  have  not 
provided.  The  execution  of  the  budget  of  extraor- 
dinary revenues  was  made  possible  only  through  negotia- 
tions from  day  to  day  at  the  counter  of  the  Treasury.  At 
no  time  have  I  seen  the  burdens  of  administration  of  the 
Treasury  so  difficult.  I  am  convinced  that  the  Treasury 
in  1883  had  to  meet  something  like  650,000,000  or  750,- 

84 


THE  KRAMERS  OF  THE  BUDGET 

000,000  francs  of  deductions  or  expenditures  from  the 
fund  balances  of  the  Treasury  or  from  sources  outside 
of  what  I  would  call  the  normal  revenues  resulting  from 
the  ordinary  collection  of  taxes."  (Testimony  of  M. 
Joseph  Gay  before  the  Legislative  Commission  on  Rail- 
roads, session  of  February  2;^,  1895.)     , 

3.  Supervision  and  control  over  institutions  in  which  pub-  Supervision 
lie  credit  is  concerned :  Here  the  number  and  the  importance  Jions"of^"" 
of  subjects  with  which  the  division  of  transfer  has  to  deal,  Public 
of  operations  it  has  to  follow,  interests  it  has  to  protect,  in-  <^redit,  Etc. 
formation  it  must  necessarily  possess,  and  all  work  it  has  to 
perform,  become  so  large  that  one  can  hardly  comprehend 
how  a  single  division  can  possibly  handle  the  work.  A  perma- 
nent congress  of  experienced  economists  dividing  its  task 
among  its  members  in  accordance  with  the  particular  ability 
of  each  wouW  have  a  hard  time  to  perform  these  duties.^y 
The  following  list  gives  an  idea  of  what  is  to  be  done :  super- 
vision over  the  issuing  of  money,  over  monetary  questions, 
credit  questions,  banks  and  exchanges;  supervision  over  the 
lx)urse,  stockbrokers,  admission  of  securities  to  the  market, 
relations  with  credit  institutions,  the  solving  of  crises,  rela- 
tions of  the  State  with  railroad  companies,  guarantees  of  in- 
terest; supervision  over  savings  banks,  questions  of  rural 
credits,  of  mutual  companies,  of  limitations  of  deposits;  su- 
pervision over  the  Bank  of  France;  preparation  of  laws  re- 
lating to  the  renewal  of  its  privilege;  supervision  over  the 
Credit  Fonder  of  France,  relations  with  the  Caisse  des  Depots 
et  Cansigriatioiis;  knowledge  of  the  situation  in  foreign  coun- 
tries, etc.  The  very  moment  when  one  of  these  subjects  is 
raised  (on  which,  by  the  way,  volumes  and  volumes  have 
l>een  written)  or  an  incident  which  is  liable  to  agitate  the 
Government,  or  when  a  bill  is  presented  in  the  Chaml^ers,  or 
there  is  a  crisis,  or  in  case  of  international  difficulties  or  in 
case  complaints  of  the  public  arise,  the  division  of  transfer 
must,  when  consulted,  be  able  to  give  its  advice  and  prepare 
a  solution. 

Finally,  the  ''division  of  control"  of  the  bureaus  or  offices  Divisions  of 
of  finance  administration  and  of  passing  orders  for  payment  piTance  Ad- 
studies   proposals   submitted  by   excise   officers   for  the  ap-  ministration 
proval  of  the  Minister  of  Finance  and  presents  them  with  its 
opinion  to  the  Minister  for  signature.     What  is  the  scope  of 
this  definition?     What  is  the  precise  limit  between  the  ob- 

85 


THE  BUDGET 

ligatory  competency  of  the  Minister  and  of  the  competency 
which  through  delegation  is  vested  in  the  director  general? 
-With  whom  does  the  right  rest  to  sign  this  or  that  order? 
The  regulations  at  times  state  expressly  and  again  leave  it 
to  be  inferred.  In  a  general  way,  all  important  matters, 
communications* addressed  to  other  ministers  or  to  members 
of  the  legislature;  all  matters  which  are  liable  to  involve  an 
expenditure  or  to  modify  the  present  or  future  elements  of 
the  budget  require  the  signature  of  the  Minister  of  Finance. 
The  division  of  control  performs  a  very  delicate  function  by 
examining,  discussing,  and  disapproving  at  times  the  sugges- 
tions made  by  excise  officers  which  the  Minister  has  before 
him  for  approval;  it  prepares  and  recommends  for  action  the 
measures  of  final  decisions  which  it  subsequently  publishes. 

OMces  or  Bureaus  of  Finance  Administration:  The  fol- 
lowing seems  to  be  a  natural  gradation  of  subordinate  au- 
thorities, which  form  the  second  branch  of  the  central  admin- 
istration— those  which  depend  less  directly  on  the  Minister. 
The  five  offices  or  bureaus  of  finance  administration  are  as 
follows : 

General  Administration  of  Direct  taxes. 
General  Administration  of  Registration,  Stamp  Matters  and 
Domains. 

General  Administration  of  Customs. 
General  Administration  of  Indirect  Taxes. 
General  Administration  of  State-owned  Industries. 


Organization 

and 

Personnel 


The  Func- 
tion of 
Managing 
Boards 


These  administrations  employ  a  personnel  composed  of 
directors  general,  managers,  chiefs  and  deputy-chiefs  of  bu- 
reaus, senior  and  regular  clerks,  mailing  clerks,  etc.,  in  all, 
more  than  four  hundred  people.  Each  one  of  these  admin- 
istrations is  run  by  a  director  general,  who  is  assisted  by 
a  managing  board  which  is  composed  of  the  director  general, 
the  president  and  the  managers.  The  managers  are  chiefs 
of  the  various  divisions  into  which  the  services  are  divided. 

The  institution  of  "managing  boards"  was  reestablished  at 
the  beginning  of  the  Restoration  and  tends  to  limit  the  per- 
sonal power  of  the  director  general.  It  was  thought  most 
justly  at  that  time  that  one  man  with  no  other  guarantee 
than  his  personal  responsibility  should  not  decide  on  matters 
of  considerable  interest  and  on  the  destinies  of  thousands 

86 


THE  KRAMERS  OF  THE  BUDGET 


of  employees  of  the  bureaus  and  offices  of  the  finance  admin- 
istration. As  a  result,  the  Ordinances  of  January  3,  182 1 
(relating  to  indirect  taxes  and  matters  of  registration),  of 
January  30,  1822  (relating  to  customs),  etc.,  have  organized, 
or  rather  reorganized,  the  collective  bodies  to  which  were  en- 
trusted the  solution  of  important  decisions  concerning  the 
personnel  and  business  matters.  Cases  and  methods  of  de- 
liberation of  managing  boards  were  specified  in  detail  in  these 
ordinances.  Besides  the  ordinances  proper,  a  number  of  con- 
temporaneous pamphlets  on  the  subject  may  be  consulted; 
these  pamphlets  give  the  different  commentaries  on  the  neces- 
sity of  the  institution. 

The  Minister  of  Finance  delegates  a  portion  only  of  his 
powers  to  the  finance  administrations  without  ceasing,  how- 
ever, to  be  their  chief.  In  matters  of  the  personnel,  the  pow- 
ers which  he  delegates  are  exactly  defined.  So  far  as  busi- 
ness matters  are  concerned,  the  dividing  line,  as  we  have 
seen,  seems  to  be  less  distinct,  at  least  on  paper;  because  in 
practice  the  rule  is  always  observed  to  appeal  to  the  superior 
authority  of  the  Minister  not  only  in  cases  expressly  specified, 
but  on  every  important  occasion. 

The  central  administration  once  grouped  around  its  chief, 
the  chart  shows  in  the  second  line  the  so-called  subordinate 
institutions  (Institutions  vassales).  The  terms  "subordinate 
institutions"  express,  as  well  as  possible,  the  more  or  less  de- 
pendent and  secondary  place,  very  different  in  all  cases,  in 
which  the  following  establishments  find  themselves  with  re- 
lation to  the  Minister  of  Finance. 

First,  the  Caisse  des  Depots  et  Consignations^  which, 
properly  speaking,  embraces  the  service  of  deposits  and  con- 
signments of  savings  banks,  mutual  aid  associations,  the  na- 
tional pension  fund,  the  life  insurance  company,  the  accident 
insurance  company,  etc.,  without  speaking  of  the  sinking 
fund  which  no  longer  exists  and  which  is  but  "a  memory  of 
the  past  and  a  hope  of  the  future."  The  director  general 
and  the  two  deputy  directors  are  appointed  by  decree;  the 
director  general,  however,  can  be  recalled  only  upon  a  prop- 
erly substantiated  demand  made  by  the  commission  of  su- 
pervision addressed  to  the  chief  executive  of  the  country. 
The    ''commission   of   supervision" — which   is   composed   of 

^  {Caisse  des  Depots  et  Consignations  is  a  Government  office  in 
which  trust  moneys  or  funds  in  litigation  are  deposited  for  safe-keep- 
ing.— The  Editor.] 

87 


Relation  of 
Organization 
to  Minister 


Subordinate 
or  "Vassal" 
Institutions 


The  Caisse 
des  Depots 
et  Consigna- 
tions 


THE  BUDGET 

members  of  the  legislature,  of  the  Cour  des  Cornptes,  of  the 
chamber  of  commerce,  of  the  Bank  of  France,  of  the  Conseil 
d'Etat,  etc. — has  the  exclusive  charge  of  approving  the  spe- 
cial budget  of  the  Caisse  des  Depots  et  Consignations,  of 
examining  and  certifying  the  accounts  of  its  annual  opera- 
tions, of  making  a  report  thereon  to  the  Senate  and  the  Cham- 
ber of  Deputies,  and  of  making  all  observations  and  all  veri- 
fications which  the  commission  may  deem  useful. 

On  account  of  these  various  characteristics — such  as  the 
quasi-irremovability  of  the  director  general,  the  special  budget, 
not  included  in  the  budget  of  the  State,  authority  resting  with 
an  extra-parliamentary  commission — the  Caisse  des  Depots 
et  Consignations  seems  to  demand  consideration  as  an  in- 
dependent institution  or,  at  least,  as  a  subsidiary  institution, 
provided  this  term  is  a  proper  one;  nothing  is  more  delicate 
to  define  than  the  link  which  exists  between  this  institution 
and  the  administration  of  finances.  To  call  this  institution 
independent,  without  reserve,  would  mean  to  ignore  the  in- 
contestable supremacy  of  the  Minister  of  Finance.  By  de- 
claring, however,  on  the  other  hand  that  all  the  aforesaid 
guarantees  are  merely  fictitious,  as  has  been  said  repeatedly, 
would  mean  a  flat  contradiction  of  the  assurances  given  by 
the  Government,  according  to  which  the  autonomy  of  the 
Caisse  des  Depots  et  Consignations  not  only  exists  de  facto, 
but  has  to  be  scrupulously  respected  in  the  interest  of  the  pub- 
lic. Let  us  couple,  therefore,  the  idea  of  autonomy  with 
that  of  feudal  allegiance  of  which  we  have  spoken  above. 

The  members  of  the  Cour  des  Comptes  are  recruited  and 
nominated  upon  the  suggestion  of  the  Minister  of  Finance, 
with  whom  also  rests  the  question  of  their  promotion;  to 
The  Cour  the  Minister  of  Finance  are  also  submitted  the  declarations 
des  Comptes  ^f  conformity  relating  to  each  year  and  each  fiscal  period, 
and  through  the  minister  of  Finance  these  declarations  are 
communicated  to  the  Chambers.  The  Attorney  General  and 
the  courts  have  constant  dealings  with  this  Cour  des  Comptes, 
The  judges  of  the  Cotcr  des  Comptes  are  not  removable;  in 
this  respect  their  tenure  is  as  secure  as  that  of  the  judges  of 
the  Supreme  Court  of  Appeals  (Cour  de  Cassation) ,  con- 
stituting thus  a  tribunal  the  independence  of  which — the  word 
"Independence"  is  essential  in  the  connection — could  not  be 
contested,  if  one  bears  in  mind  the  deference  and  respect  due 
the  authority  which  makes  the  appointments  and  the  promo- 
tions. 

88 


THE  KRAMERS  OF  THE  BUDGET 

The  Bank  of  France,  a  private  institution  owned  by  stock- 
holders and  dividing  its  profits  in  the  form  of  dividends, 
has  its  governor,  its  deputy  governors  and  managers  of 
branches,  who  are  appointed  by  decree  upon  nomination  by 
the  Minister  of  Finance.  Moreover,  the  Bank  of  France  has  The  Bank 
a  monopoly  from  the  State,  to  which  it  is  bound  by  a  special  °*  France 
contract;  the  maximum  limit  of  its  business  is  regulated  by 
law;  funds  of  the  Treasury  are  given  to  the  bank  on  a  run- 
ning account,  etc.  All  these  characteristics  place  the  Bank 
of  France  in  a  relatively  subordinate  position  with  regard  to 
the  Minister  of  Finance;  this  situation,  however,  does  not 
affect  the  commercial  independence  of  the  Bank. 

The  Credit  Fonder  of  France,^  the  governor  and  the  deputy   The  Creilit 
governors  of  which  are  appointed  by  decree,  is  also  subordi-  ^f^"^*^^ 
nated  to  the  Minister  of  Finance  by  virtue  of  the  following 
provisions : 

"The  rural  credits  associations  are  placed  within  the 
jurisdiction  of  our  minister  secretary  of  state  for  the  De-  The  Rural 
partment  of  Finance."    (Decree  of  June  26,  1854.)   "The  ^g^gQ^Jj^gti^^g 
rural  credits  associations  are  subject  to  audit  by  finance 
examiners."     (Decree  of  October  18,  1852.) 

Finally,  the  Minister  of  Finance  countersigns  the  appoint-    Bourses, 
ments  of   stockbrokers,   receives  their  surety-bonds,   decides  ^^^    ^^  "^' 
on  the  securities  to  be  admitted  to  the  market,  and  supervises 
the  stock  market,  etc. 

Institutions  of  credit,  railroad  companies,  etc.,  have  con- 
stant dealings  with  the  Minister  of  Finance;  these  relations 
have  quite  often  the  character  of  actual  dependence. 

Thus,  when  a  new  incumbent  is  officially  installed,  or  at  Jhe  Rule  of 
the  yearly  receptions  on  New  Year's  Day,  we  see  the  waiting- 
room  of  the  Minister  of  Finance  crowded.  After  the  leading 
members  of  his  advisory  and  staff  divisions  have  paid  their 
respects,  they  having  prior  right  through  precedent,  delega- 
tions from  the  large  divisions  of  finance  administration  or 
subsidiary  service  departments  come  in  succession  to  pay  him 
the  tribute  of  their  respect.  The  Minister  addresses  each 
of  the  delegations  with  a  few  appropriate  words,  conscious 
of  the  extent  of  the  great  power  which  he  exercises.^ 

^  [The  Credit  Fonder  is  a  bank  which  lends  money  on  the  security 
of  improved  real  estate. — The  Editor.] 

2  It  has  often  been  demanded  that  this  supremacy  of  the  Minister 
of  Finance,  because  of  its  extent  and  for  the  sake  of  its  unity,  be 

89 


THE  BUDGET 


Its  Constitu- 
tional 
Position 


Its  Organ- 
ization 


The  Treasury  in  England:  One  must  go  to  England  to 
find  a  country  where  the  preparation  of  the  budget  is  en- 
trusted to  a  Ministry  of  Finance,  which  has  really  supreme 
power.  In  England  the  Ministry  of  Finance  is  an  "imper- 
sonal" board,  and  this  constitutes  its  power.  This  board  is 
recruited,  moreover,  from  among  the  most  influential  per- 
sonages of  the  cabinet  in  power. 

At  the  head  of  the  ministry  stands  the  First  Lord  of  the 
Treasury,  who  is  generally  the  chief  of  the  Cabinet — at  any 
rate,  he  is  the  leader  of  the  party  in  power  ^ — directing  the 
general  policy  of  the  country.  Under  him  is  the  Chancellor 
of  the  Exchequer,  who  has  special  charge  of  directing  the 
financial  affairs.    Besides,  there  are  three  or  four  junior  Lords 

strengthened  by  the  addition  of  a  "Financial  Board,"  composed  of 
the  principal  chiefs  of  the  services  of  the  Ministry  of  Finances,  of 
the  inspectors  general  of  finances  and  even  possibly  of  prominent 
personages  taken  outside  of  the  Administration.  The  functions  of 
this  financial  board  would  consist  of  explaining  the  important  reso- 
lutions of  the  ministry,  of  studying,  more  deeply  than  the  Minister 
is  able  to  do,  all  special  questions  and. of  giving,  in  a  word,  a  solid 
base  to  his  responsibility. 

"The  institution  of  a  special  board  has  existed  for  a  long  time 
in  all  the  large  ministries  and  is  lacking  only  in  the  ministry  of 
finance.  It  would  reestablish  the  permanency  of  good  principles, 
the  necessary  harmony  which  is  often  rather  difficult  to  maintain 
among  the  various  chiefs  of  the  service  and  would  insure  finally 
the  general  harmony  of  all  the  actions  of  this  vast  administration" 
(Sy  St  erne  financier  de  la  France).  It  is  thirty  or  forty  years  since 
the  Marquis  dAudiffret  expressed  himself  thus,  but  the  reform  he 
advocated  has  not  as  yet  been  introduced.  This,  however,  would  have 
been  one  of  the  most  simple  and  most  effective  reforms  to  put  in 
practice,  particularly  in  those  times  of  frequently  changing  ministers. 

This  reform  has  been  more  recently  brought  to  public  attention  by 
an  article  by  Alfred  Neymarck  in  the  Journal  des  Economistes,  Octo- 
ber, 1886;  the  author  in  1874  published  a  pamphlet  under  the  follow- 
ing title :  De  la  necessite  d'un  conseil  superieur  des  finances.  We  have 
also  pointed  out  the  importance  of  the  institution  of  a  Financial 
Board  in  the  Reforme  sociale  of  March  i,  1881. 

It  is  proper,  at  any  rate,  to  mention  that  Article  8  of  the  Decree 
organizing  the  Ministry  of  Finances  of  January  19,  1885,  provides 
for  a  "Board  of  Directors"  which  has  charge  of  deliberation  on  all 
questions  of  personnel  and  of  discipline.  This  would  mean  the  first 
step  in  the  right  direction  if  the  provisions  of  the  aforesaid  Article  8 
were  extended  to  more  general  questions  and  if  the  membership  of 
the  Board  were  increased. 

^  Under  the  ministry  of  Salisbury  in  1886,  for  instance,  the  First 
Lords  of  the  Treasury,  Messrs.  Smith  and  Balfour,  who  succeeded 
each  other,  although  they  were  not  Prime  Ministers,  were  at  any 
rate  the  leaders  of  the  party  in  power  in  the  House  of  Commons. 

9d 


THE  KRAMERS  OF  THE  BUDGET 


and  two  Secretaries  of  the  Treasury,  all  of  whom  are  members 
of  the  Ministry.  They  are  the  seven  or  eight  personages 
who  sit  in  the  Bureau  of  the  Treasury  of  England.^  It  is 
easily  seen  what  extent  of  supremacy  a  Ministry  of  Finances 
so  powerfully  organized  exercises  over  the  other  branches  of 
administrative  service. 

We  have  stated  above  that  the  First  Lord  of  the  Treasury 
is  usually  the  head  of  the  Cabinet  of  Ministers.  The  reason 
why  we  did  not  use  the  word  always  instead  of  usually 
is  that  this  rule  has  been  deviated  from  in  a  few  exceptional 
cases;  this  does  not,  however,  mean  that  the  rule  is  not  a 
normal  one  since  it  was  in  force  from  1806  until  1885  without 
exception  and  is  in  force  at  the  present  time.^  The  Prime 
Minister  of  England  occupies  a  very  high  position,  in  fact 
the  highest  a  human  being  can  attain.  "The  Prime  Minister 
does  not  reign ;  he  governs."  He  has  not  the  shadow  of  power, 
but  he  holds  it  in  reality.^ 

The  prestige  which  such  chairmanship  gives  to  the  Bureau 
of  the  Treasury  can  easily  l>e  understood.'*  The  deputy  of 
the  First  Lord  is  very  often  together  with  his  chief,  the  leader 
of  the  party  in  one  of  the  two  Houses  of  Parliament.  Owning 
to  the  fact  that  in  England  the  parties  obey  strict  discipline, 
the  presence  of  the  party's  two  leaders  in  the  Bureau  of  the 
Treasury  increases  so  much  more  the  party's  authority. 

Public  opinion  unanimously  favors  the  precedence  accorded 
to  the  Treasury,  which  tends  to  guarantee  the  maintenance 
of  good  order  in  the  finances  and  a  wholesome  assurance 
against  costly  and  inconsiderate  encroachments  on  the  part 
of  disbursing  ministers.  In  a  word,  public  opinion  has  very 
wisely  estimated  that  financial  prosperity  constitutes  the  most 
precious  possession  and  is  the  vital  interest  of  the  country, 
and  that  it  is,  therefore,  advisable  to  give  the  first  position 
to  those  men  who  are  in  charge  of  safeguarding  this  financial 


Prime 
Minister 
Usually 
First  Lord 
of  Treasury 


Direct  Re- 
sponsibility 
for  Finances 


Public  Opin- 
ion Back  of 
This  Plan 
of  Control 


^  There  is  also  a  permanent  secretary  outside  of  the  political  party 
who  preserves  the  traditions  and  the  continuation  of  affairs. 

2  In  1908  Sir  Henry  Campbell-Bannerman,  Prime  Minister,  was  at 
the  same  time  First  Lord  of  the  Treasury  and  so  was  his  successor, 
Mr.  Asquith,  from  April  of  the  same  year  on. 

^  We  have  taken  these  remarks  from  the  great  work  of  Count  de 
Franqueville,  Member  of  the  Institute,  Le  Gouvernement  et  le  Par- 
lement  britanniques,  Paris,  1887. 

*  The  First  Lord  of  the  Treasury  has  at  times  combined  his  func- 
tions with  those  of  the  Chancellor  of  the  Exchequer,  for  instance 
Sir  Robert  Peel  and  Mr.  Gladstone. 


91 


THE  BUDGET 

prosperity.    Le  Play  has  well  said  in  his  book,  Reforme  So- 
ciale: 

"The  English  are  convinced  that  the  power  of  a  nation 
or,  in  other  words,  the  effort  which  a  nation  is  able  to 
.  make  in  order  to  defend  at  all  costs  its  independence  and 
its  honor  against  a  foreign  power,  is  measured  by  the 
financial  resources  of  the  State  just  as  much  as  by  the 
bravery  of  its  citizens."  ^ 

Thus  organized,  the  Treasury  could  not  very  well  limit  it- 
self, as  does  the  Minister  of  Finance  in  France,  to  a  consolida- 
tion or  summary  of  various  plans  of  the  different  ministers. 
The  high  position  occupied  by  its  members  gives  to  the  Treas- 
ury an  entirely  different  influence  in  the  course  of  the  prepara- 
tion of  the  budget.  It  was  undoubtedly  in  a  sudden  outburst 
of  anger  and  on  account  of  an  intention  to  throw  off  the  re- 
sponsibility for  the  irremediable  increase  of  public  expendi- 
tures against  which  he  protested  that  Sir  Vernon  Harcourt 
incidentally  exclaimed  during  his  official  statement  of  April 
t6,  1894:  "The  function  of  the  Chancellor  of  the  Exchequer 
is  not  to  discuss  the  estimates  of  expenditures;  his  function 
is  to  provide  the  necessary  money.'*  Fortunately,  the  function 
of  the  Chancellor  of  the  Exchequer  is  not  limited  to  this 
one  thing,  particularly  because  of  the  fact  that  in  the  Bu- 
reau of  the  Treasury  the  budgets  of  the  individual  minis- 
ters are  submitted  to  a  veritable  control  and  to  a  possible  re- 
vision. 

Under  the  Ministry  of  Pitt,  this  right  of  control  and  of 
revision  became  obliterated  as  a  result  of  repeated  contests. 
Since  1818  the  House  of  Commons  has  expressly  given  to 
the  Treasury 

^  Le  Play  continues  as  follows :  "The  organization  of  finances  and 
even  the  organization  of  the  entire  executive  power  in  England  are 
subordinated  to  this  doctrine.  The  statesman  who  directs  the  Gov- 
ernment is  customarily  the  First  Lord  of  the  Treasury.  His  par- 
ticular duty  toward  the  country  and  the  sovereign  is  to  keep  the 
revenues  up  to  the  level  of  the  expenditures.  It  is  manifest  that  in 
matters  of  finances  we  are  suffering  not  from  concentration  but  from 
scattering  of  attributes.  No  statesman  has  really  any  responsibility 
for  the  French  budget  either  before  the  sovereign  or  before  the  pub- 
lic. The  equilibrium  of  the  budget  has  always  been  destroyed,  as  a 
matter  of  fact,  by  the  right  of  each  minister  to  prepare  the  budget 
and  to  pass  for  payment  the  expenditures  of  his  branch  of  service" 
{Reforme  sociale,  Vol.  II). 

92 


THE  KRAMERS  OF  THE  BUDGET 

" — the  power  to  determine  the  amount  of  expenditures  of 
each  ministerial  department,  a  power  which  the  Treasury 
holds  by  virtue  of  the  Constitution." — "The  Treasury  pos- 
sesses absolute  power  of  rejection,  of  which  it  avails  itself 
at  times,  very  much  to  the  displeasure  of  the  depart- 
ments," said  one  assistant  of  the  Financial  Secretary  in 
the  course  of  an  inquiry.^ 

The  Treasury  has  power  by  virtue  of  its  office  to  cancel  Distinction 
items  of  expenditure  in  the  budget  plans  which  are  submitted   ^^^^  with 
to  the  Treasury,  of  which  it  disapproves.     This  is  the  ex-   Army  and 
treme  limit.     In  practice,  however,  the  Treasury  uses  more   Navy 
conciliatory  methods;  it  discusses  the  figures  of  the  "Esti- 
mates" with  the  chiefs  of  the  services  in  question;  it  pene- 
trates into  the  details;  has  reasons   for  each  appropriation 
explained  to  it,  line  by  line;  and  succeeds  in  agreeing  only  to 
such  expenditures,  the  necessity  of  which  seems  imperative 
to  the  Treasury. 

The  power  of  control  exercised  under  these  conditions  ap- 
plies only  to  civil  services,  that  is,  services  of  public  works 
and  public  buildings,  justice,  public  instruction,  sciences  and 
fine  arts,  diplomatic  and  colonial  service,  financial  adminis- 
tration, etc.,  which  involve  an  expenditure  of  more  than 
1,000,000,000  francs,  or  almost  half  of  the  budget  outside 
of  the  Consolidated  Fund.  Several  of  these  civil  services 
are  already  placed  under  the  direct  supervision  of  the  Treas- 
ury. ^ 

So  far  as  the  Army  and  Navy  are  concerned,  this  subordi- 
nation is  less  strict.  After  a  prolonged  conflict  the  relations 
between  the  Bureau  of  the  Treasury  and  the  Secretary  of 
State  for  War  and  the  First  Lord  of  the  Admiralty  have 
been  definitely  regulated  by  the  "Treasury-Minutes"  of  No- 
vember 24,  1870.  The  provisions  of  this  note  determine  that 
three  weeks  before  the  meeting  of  the  "Committee  on  Sub- 
sidies" of  the  House  of  Commons,  the  "Estimates"  of  the 
Army  and  Navy  shall  be  submitted  in  their  final  form  to  the 

*  See  articles  published  by  M.  Auguste  Arnaune  in  UEconomiste 
frangais,  April  14  and  May  24,  1885,  which  show  in  a  very  precise 
way  the  budgetary  mechanism  of  England. 

2  The  Treasury  personally  supervises  the  following  branches  of 
civil  service:  the  Exchequer,  Paymaster  General's  department,  Na- 
tional Debt  Office,  Royal  Mint,  the  Audit  Office,  Office  of  Supplies, 
Public  Works  Loan  Board,  Works  and  Public  Buildings,  Post  Office, 
Board  of  Inland  Revenue,  Woods,  Forests  and  Land  Revenues. 

93 


THE  BUDGET 

Treasury.  The  latter  takes  cognizance  of  these  Estimates  and 
leaves  to  the  competent  ministers  themselves  the  task  of  pre- 
senting their  plans  to  the  House.  It  is  added,  however,  that 
the  Estimates  for  the  Army  and  the  Navy  shall  contain  no 
change  in  classification  without  previous  approval  of  the  Treas- 
ury;  that  no  new  expenditure  shall  be  included  without  previ- 
ous approval  of  the  Treasury;  finally,  that  without  the  ap- 
proval of  the  Treasury,  no  memorandum,  or  order  relating 
to  organization,  or  any  reform  relating  to  salaries  or  pensions 
can  be  presented  to  the  Sovereign.  'The  Lords  of  the  Treas- 
ury declare  that  they  shall  not  consider  as  sufficiently  au- 
thorized-any  payment  of  expenditures,  the  vote  on  which  shall 
be  demanded  from  the  House  of  Commons  without  their 
previous  consent,  in  conformity  with  the  conditions  stated 
above." 

These  privileges,  which  were  recognized  as  necessary  in  re- 
lations with  departments  particularly  jealous  of  their  auton- 
omy, by  no  means  give  these  departments  full  independence.^ 
It  can  safely  be  stated  that  the  Treasury  exercises  a  real 
right  of  control  in  the  proper  sense  of  the  word  over  the  esti- 
mates of  other  branches  of  the  service.  So  far  as  the  civil 
services  are  concerned,  which  means  more  than  half  of  the 
services  on  which  votes  are  taken,  the  action  of  the  Treasury 
becomes  really  dominating  and  the  preparation  of  the  budget 
rests  with  the  Treasury.^ 

We  shall  see  what  beneficial  influence  the  supremacy  of 
the  Ministry  of  Finance,  combined  with  many  other  causes, 
exercises  upon  the  prosperity  of  the  finances  of  England. 

In  Italy  the  Minister  of  the  Treasury  has  certain  legal  su- 
periority over  his  colleagues  which  appears  from  the  fact  that 
the  chiefs  of  the  accounting  divisions  of  each  ministry  are 
appointed  upon  his  nomination  and  are  supervised  by  him. 
But  as  the  question  of  control  is  one  of  particular  importance 
in  this  connection,  we  shall  speak  of  it  more  in  detail  in  the 
last  part  of  this  book. 

*  So  far  as  the  Army  is  concerned,  after  the  number  of  men  under 
arms,  which  is  the  essential  base  for  the  budget  figures,  has  been 
determined  by  the  cabinet,  control  by  the  Treasury  becomes  less 
necessary. 

2  The  tone  of  the  speeches  of  the  Chancellors  of  the  Exchequer 
with  regard  to  expenditures  shows  that  the  suggestions  and  the 
figures  for  these  expenditures  result  from  their  own  responsibility. 
See  particularly  the  last  budget  estimates  of  Messrs.  Ritchie  and 
Asquith. 

94 


THE  FRAMERS  OF  THE  BUDGET 

Recapitulation:  Recapitulating  the  above — who  prepares 
the  Budget?  The  Executive  in  all  countries,  with  more  or 
less  restrictions. 

Within  the  executive  branch,  what  agencies  cooperate  in 
the  preparation  of  the  budget?  First,  local  agents  who  are 
particularly  competent  to  appreciate  the  needs  and  the  desires 
of  the  people.  The  central  administrations  summarize,  cor- 
rect, and  develop  subsequently  the  suggestions  of  local  agents. 
The  executive  heads  of  the  departements  revise  the  plans  of 
their  sulx)rdinates  and  add  their  own  suggestions.  The  budget 
plans  of  each  ministry  are  then  turned  over  to  the  Minister 
of  Finance.  The  latter,  vested  with  more  or  less  authority, 
according  to  the  country,  consolidates  or  summarizes  and 
controls  these  plans,  adds  to  them  the  plan  of  revenues  which 
is  invariably  drafted  by  him  alone,  and  finally  submits  to  the 
legislature  the  entire  finance  bill,  which  is  presented  by  the 
Minister  of  Finance  in  a  ''Statement  of  Supporting  Argu- 
ments." 

Let  us  draw  here  the  practical  conclusion  that  in  the  in- 
terest of  good  administration  of  finance,  the  larger  portion 
of  initiative  and  authority  should  rest  with  the  executive 
branch  and  within  the  executive  branch  with  the  Minister  of 
Finance. 


95 


CHAPTER  IV 
TIME  OF  PREPARING  THE  BUDGET 


Initial 
Estimates 
Prepared 
More  Than 
a  Year  in 
Advance 


Time  of  the  Preparation  of  the  Budget  in  France :  Initial  Estimates 
Prepared  More  Than  a  Year  in  Advance;  Exceptional  Cases; 
The  Request  for  Estimates;  Comment  of  M.  Ribot  on  the  Subject; 
Objections  to  Practice;  Impairs  the  Value  of  the  Estimates;  Abuses 
Which  are  Inherent ;  Resort  to  Supplementary  Estimates ;  Proposal 
to  Change  the  Beginning  of  the  Fiscal  Year  in  1819;  A  Plan  to 
Make  the  Estimates  More  Proximate;  Change  Date  of  Beginning 
of  Fiscal  Year ;  Method  of  Reducing  Period  of  Preparation ;  Period 
of  Session  of  Legislature  Determined  by  Season. 

Opening  Dates  of  the  Fiscal  Year  in  Foreign  Countries:  Pro- 
posed Reform  Adopted  by  Other  Nations ;  Change  of  Date  in  Italy ; 
Date  Changed  in  United  States  in  1844;  April  i  Selected  as  Date 
in  Prussia;  The  German  Empire;  England  Eliminates  Uncertainty 
of  Estimates  altogether;  The  Budget  or  Plan  Submitted  After 
Estimates  Have  Been  Considered;  Parliament  Asked  to  Act  on 
a  Present  Condition;  April  i  or  July  i  the  More  Usual  Date. 

New  Plan  of  Changing  the  Date  of  the  Fiscal  Year  in  France 
Rejected  in  1888:  Effort  of  Ribot  to  Have  Date  Changed;  Objection 
to  July  I  as  Beginning  Date ;  Advantages  of  Practice  for  Purposes 
of  Control  Over  Expenditures. 

Necessity  of  Bringing  the  Estimates  Closer  to  the  Actual  Facts  as  a 
Basis  for  Financial  Planning. 

When  is  the  budget  prepared,  and  when  should  it  be  pre- 
pared ?    Let  us  examine  into  the  actual  date  of  its  preparation. 

Time  of  the  Preparation  of  the  Budget  in  France:  In 
France,  except  in  case  of  extraordinary  delays,  the  various 
departments  of  Government  undertake  the  preparation  of  the 
budget  in  or  about  the  months  of  October  and  November.  It 
is  to  be  understood  that  this  does  not  mean  the  October  and 
November  immediately  preceding  the  putting  of  the  budget 
into  effect;  this  would  be  too  nice  an  adjustment,  indeed;  it 
means  the  October  and  November  of  the  year  preceding.  In 
those  months  the  several  departments  prepare  their  budgets  for 
the  year  following  the  next  ensuing  year— that  is,  for  the 
year  which  is  to  begin  fourteen  or  fifteen  months  later.  Thus, 
in  October  and  November,  191 1,  the  administrations  prepare 

96 


TIME  OF  PREPARING  THE  BUDGET 


the  budget  for  191 3,  unless  there  are  some  exceptional  delays. 

The  answer  to  the  question  which  was  put  at  the  begin- 
ning of  this  chapter  is  simple,  so  far  as  France  is  concerned. 
When  is  the  budget  prepared?  Fourteen  or  fifteen  months, 
as  a  rule,  prior  to  the  beginning  of  its  execution,  unless  ex- 
ceptional circumstances  should  change  this  customary  prac- 
tice. 

Taking  the  budget  for  1906  as  an  example:  although  the 
Minister  of  Finance  had  not  submitted  a  general  plan  until  Examples  of 
about  the  end  of  1905,  the  several  departments  completed  their  *^^  Practice 
preliminary  work  of  estimating  the  expenditures  in  October 
and  November  of  1904.  It  is  possible  that  they  took  up  this 
work  again  at  a  time  less  distant  from  the  opening  date  of 
the  fiscal  year.  Certain  budgets  of  former  years,  as  a  mat- 
ter of  fact,  were  prepared  at  different  times  because  of 
Cabinet  crises,  temporary  arrangements,  parliamentary  inci- 
dents, etc.  However,  initial  preparation  of  the  budgets  within 
the  ministries  proper,  particularly  on  the  part  of  local  services 
and  of  the  special  administrations,  takes  place  about  October 
and  November  of  the  second  year  preceding  the  beginning 
of  the  fiscal  period,  subject,  of  course,  to  rectifications.  More 
exactly  the  time  which  lapses  is  shown  by  the  dates  on  which 
specific  financial  bills  were  submitted,  most  of  these  were  sub- 
mitted the  first  month  of  the  year  previous  to  the  fiscal  period 
[for  which  they  are  to  be  considered]  : 
'  The  dates  of  submitting  budget  plans  to  the  Chamber  of 
Deputies  [for  the  year  referred  to]  follow: 


Fiscal  year  1880 

January  23,  1879 

"   1881 

31,  1880 

"   1882 

21,  1881 

"    "   1883 

"    23,  1882 

"    "   1890 

February  9,  1889 

"   1892 

"    17,  1891 

"    "   1897 

I,  1896 

Some  exceptional  cases  may  be  noted :  the  budget  plan  for  Exceptional 

1899  was  submitted  only  on  October  21,   1898,  because  of  Cases 
the  general  elections  of  May,  1898;  the  budget  prepared  for 

1900  was  submitted  on  July  4,  1899,  because  of  the  Cabinet 
crisis  of  June,  1899;  the  budget  prepared  for  1905  was  sub- 
mitted on  March  30,  1904;  in  1906  the  elections  of  the  Presi- 
dent of  the  Republic  and  of  the  Chamber  of  Deputies  delayed 

97 


THE  BUDGET 


The  Requests 

for 

Estimates 


Comment  of 
M.  Ribot  on 
the  Subject 


Objections  to 
Practice 


the  submitting  of  the  budget  for  1907  until  June  6,  1906;  in 
1907  the  budget  for  1908  was  not  submitted  until  May  11, 
1907,  on  account  of  the  income  tax  question  then  at  issue; 
the  budget  for  1909  was  delayed  until  May  19,  1908,  and 
that  of  1912  until  July,  191 1,  for  the  same  reason. 

If  the  Minister  of  Finance  is  to  be  ready  to  present  his 
general  budget  plan  to  the  Chaml^ers  in  January,  February  or 
March,  barring  exceptional  delays,  it  is  necessary  that  begin- 
ning at  least  with  October  of  the  previous  year  the  local 
services  and  central  administrative  offices  shall  have  proceeded 
to  the  preparation  of  their  particular  budget  plans.  As  a  mat- 
ter of  fact,  requests  are  at  times  sent  out  for  returns  at  an 
earlier  date.  The  following  is  an  extract  from  the  circular 
of  August  20,  1889:  "It  seems  necessary  for  your  sugges- 
tions to  reach  me  before  September  20  next,  so  that  the 
budget  bill  can  be  submitted  to  and  distributed  in  the  Chaml:>er 
of  Deputies  on  the  first  day  of  the  session." 

Everybody,  while  commenting  on  these  dates,  denounces 
their  bad  influence  on  the  budgetary  operations. 

M.  Ribot,  a  deputy  [now  Minister  of  Finance],  in  his  re- 
port on  the  budget  for  1883,  said: 

"The  budget  needs  to  be  studied  by  the  government  at 
least  three  months  in  advance ;  the  government  has,  there- 
fore, to  begin  the  preparation  of  the  budget  in  the  month 
of  October  and  to  devote  the  last  quarter  of  the  year  to 
this  work.  .  .  .  Thus  the  budget  is  prepared  fifteen 
months  before  being  put  into  execution."  As  Minister  of 
Finance  in  the  Senate  on  June  12,  1898,  he  said:  "Is  it 
not  true  that  a  budget  of  expenditures  drawn  up  twelve 
or  fifteen  months  before  it  is  put  into  execution  cannot 
be  definite,  that  certain  expenditures,  although  necessary, 
cannot  be  foreseen  so  long  in  advance?" 

But  why,  it  may  l3e  objected,  should  there  l^e  so  much  haste 
in  preparing  and  submitting  a  plan  which,  according  to  time- 
honored  practice,  the  Chambers  will  sanction  only  at  the  end 
of  the  year?  What  motive  impels  the  Minister  of  Finance 
to  rid  himself  of  it  at  the  very  beginning  of  the  session,  well 
knowing  that  it  will  remain  for  ten  or  twelve  months  in  the 
hands  of  the  legislature?  This  is  what  the  legislative  body, 
very  jealous  of  its  prerogatives,  takes  into  its  own  hands  just 
as  soon  as  the  Minister  of  Finance  makes  it  available.    Thus 

98 


TIME  OF  PREPARING  THE  BUDGET 

at  the  end  of  a  discussion  on  January  i6,  1908,  the  Minister 
of  Finance  was  obHged  to  pledge  himself  to  submit  the  budget 
for  1908  not  only  "as  soon  as  possible"  as  he  wanted  to  pledge 
himself  first,  but  on  the  first  day  of  March.  The  Chamber, 
on  the  other  hand,  rewards  the  Minister  for  his  respect  by 
applauding  when  he  pronounces  the  sacrosanct  formula:  "I 
have  the  honor  to  deposit  on  the  table  of  the  Chamber  the 
budget  plan  for  the  year  19 — ." 

The  haste  of  the  Minister  of  Finance,  however,  deprives 
this  budget  plan  of  its  most  essential  merit,  that  is,  of  exact-  Haste 
ness  in  the  estimates  of  revenues  ^  and  of  expenditures.  The  Impairs  the 
estimates,  being  so  premature,  must  necessarily  be,  if  not  in-  Estimates ^  ^ 
exact,  at  least  uncertain.  In  the  course  of  a  year — to  which 
must  l3e  added  the  twelve  months  during  which  the  budget  is 
being  executed — how  many  political,  commercial  or  financial 
events  may  disturb  the  result  of  anticipated  revenues  and 
upset  the  estimates  of  expenditures!  Just  to  think  that  in 
October,  1868,  and  1869,  the  Imperial  Government  quite 
placidly  prepared  the  budget  for  the  years  1870  and  1871 ! 
War  and  the  Commune  are  rare  enough  occurrences,  but  how 
many  incidents  of  less  terrible  character  are  liable  to  disturb 
the  estimates  of  the  Government?  Commercial  crises,  good 
or  bad  crops,  market  prices  of  merchandise,^  etc.,  can  within 
a  year's  time  greatly  modify  the  figures  showing  the  result 
of  taxes  and  the  total  of  expenditures. 

Not  only  does  the  perspicacity  of  the  framers  of  the  budget  Abuses 
fail  to  pierce  the  haze  of  a  too  distant  future,  but  their  sin-  J^herenf "^^ 
cerity,   which   is  more   important,   often   profits  by   the  am- 
bient obscurity   intentionally  to  deceive  itself.     Hence   two 
kinds  of  abuses  result  that  are  particularly  destructive  to  the 

^  The  advance  for  the  budget  of  revenues  is  from  ten  to  eleven 
months  and  not  more  than  fourteen  months ;  the  same  is  the  case  with 
regard  to  the  budget  of  expenditures  because  the  Minister  of  Finance, 
who  alone  is  in  charge  of  preparing  the  budget  of  revenues,  cannot 
undertake  any  work  with  regard  to  estimating  them  before  the  last 
moment. 

2  The  prices  of  commodities  and  merchandise  exercise  a  consid- 
erable influence  both  upon  the  result  of  taxes  and  upon  the  total 
of  appropriations  to  be  allotted  to  the  disbursing  ministers.  There 
is  no  question  but  that  many  important  modifications  occur  within 
the  course  of  a  year  or  a  year  and  a  half.  Taking  for  example  the 
average  of  the  year  1906  and  comparing  it  with  the  first  months  of 
1908,  it  will  be  seen  that  oats  went  down  from  20.75  to  17.52  francs; 
copper  from  230  to  161;  tin  from  484  to  335;  lead  from  49.85  to 
43-35-    On  the  contrary,  wine,  sugar  and  meat  increased  in  prices. 

99 


THE  BUDGET 


Resort  to 
Supple- 
mentary 
Estimates 


equilibrium  of  the  budget.  These  abuses,  which  will  be  ex- 
amined in  subsequent  chapters,  are  supplementary  appropria- 
tions and  increases. 

First,  as  to  supplementary  appropriations :  the  very  moment 
that  it  is  made  difficult  to  estimate,  by  reason  of  the  long 
time  which  must  elapse  after  estimates  are  submitted,  ad- 
vantage is  taken  of  this  circumstance  to  keep  the  initial  esti- 
mates low,  by  including  only  the  most  certain  expenditures, 
thereby  reserving  the  right  to  claim  during  the  fiscal  year 
[after  the  budget  is  executed]  the  necessary  additions  by  way 
of  supplementary  appropriations.  Then,  also,  come  the  over- 
estimates of  revenues.  They  represent  nothing  short  of  in- 
tentional optimism — a  blind  and  premeditated  expression  of 
confidence  in  the  prosperity  of  the  country  which,  with  the 
underestimates  of  expenditures,  seem  to  justify  this  patriotic 
illusion.  So  few  budgets  have  realized  the  balance  shown  only 
on  paper,  so  many  have  seen  the  promised  surplus  turn  into 
a  deficit  under  the  influence  of  these  two  subversive  practices, 
that  various  attempts  have  been  made  to  bring  the  date  of 
the  preparation  of  the  budget  closer  to  the  date  of  its  exe- 
cution. 


A  Plan  to 
Make  the 
Estimates 
More 
Proximate 


Proposal  to  Change  the  Beginning  of  the  Fiscal  Year  in 
i8ip:  At  the  beginning  of  the  Restoration,  M.  de  Serre, 
Keeper  of  the  Seals,  wrote: 

"So  long  in  advance  [he  was  speaking  of  the  prepara- 
tion of  the  budget  in  January],  in  the  uncertainty  of 
events,  every  forecast  is  void  and  any  approximate  esti- 
.  <r^ — mate  is  impossible.    The  limits  put  to  expenditures  are  il- 
I    lusory.     More  is  demanded  because  of  fear  that  it  will 
1    not  be  enough.    Every  rule  vanishes  into  something  vague 
and  gives  way  to  arbitrary  arrangements."     (Speech  in 
the  Chamber  of  Deputies,  February  15,  1819.) 

When  M.  de  Serre  delivered  the  above  speech,  in  18 19, 
the  Cabinet,  of  which  he  was  a  member,^  intended  to  remedy 
the  evil  by  changing  the  opening  date  of  the  fiscal  year.^ 

*  The  Ministry  of  December  17,  1818,  was  composed  as  follows: 
De  Serre,  Minister  of  Justice;  Decazes,  Minister  of  the  Interior; 
Portal,  Minister  of  the  Navy;  Dessoles,  Minister  of  Foreign  Affairs; 
Baron  Louis,  Minister  of  Finance. 

-  We  shall  explain  later  on  the  technical  meaning  of  the  words 
"fiscal  year"  and  "fiscal  period."    For  the  time  we  have  used  these 

100 


TIME  OF  PREPARING  THI-:  B13)CtKT         ; : 

Instead  of  beginning  in  January,  the  fisca,l:yeiar  WarfihervCfe- 
forth  to  begin  in  July. 

From   1789/  the  fiscal  year  in  France  had  begun  Janu-   Change  Date 
ary  i  and  ended  on  December  31,  corresponding  thus  with  "f  pLTal"^"^ 
the  political,  civil  and  solar  year.     The  Cabinet  composed  of   Year 
M.  de  Serre  and  Baron  Louis  demanded  that  the  fiscal  year 
should  henceforth  cover  twelve  months,  from  July  to  June, 
beginning  on  July  i  and  ending  June  30. 

two  terms  indiscriminately,  even  when  speaking  of  England  which, 
however,  as  we  shall  soon  see,  is  wrong  as  far  as  fiscal  periods  are 
concerned. 

^  In  1789  the  fiscal  year  for  the  etats  an  vrai  ran  from  January 
to  December,  just  as  the  solar  year.  This,  however,  was  not  always 
the  case.  From  the  speech  of  Marquis  de  Marbois  (Chamber  of  the 
Pairs,  July  30,  182 1)  we  take  the  following  details  on  the  various 
phases  of  the  fiscal  year  in  the  beginning  of  the  monarchial  system 
in  France: 

The  formation  of  the  fiscal  year  underwent  many  changes  under 
the  ancient  regime,  and  when  the  old  year  ended  after  vespers  on 
Easter  Saturday  the  New  Year  began  immediately  or  on  the  next 
day,  that  is  on  Easter  Sunday.  Thus,  the  financial  accounts,  subject 
to  the  mobility  of  this  holiday,  in  certain  years  might  cover  almost 
thirteen  months,  while  in  other  years  they  would  cover  only  eleven 
months  plus  the  month  of  April  of  about  ten  days.  A  large  amount 
of  old  accounts  show  this  peculiarity. 

In  1563  Charles  IX  issued  an  order  to  the  effect  that  all  public 
and  private  documents  be  dated  by  taking  January  i  as  the  beginning 
of  the  year.  Several  years  elapsed  before  this  change  was  gen- 
erally adopted.  Thus  the  treasurers  have  not  always  counted  by 
the  twelve  months  corresponding  with  the  twelve  months  of  the 
collectors.  Some  counted  from  Easter,  while  the  others  counted  from 
Christmas. 

The  collections  of  the  general  financial  revenues  were  counted  for 
a  long  series  of  centuries  from  October  i.  This  system  was  changed 
under  Charles  VII  for  the  benefit  of  receivers  general  who,  not  having 
"mains  garnies"  as  the  individual  collectors  and  receivers,  had  to 
count  the  year  from  January  to  January. 

The  fiscal  year  of  the  "villain-tax"  (taille)  remained  as  it  was 
from  October  to  October  because  of  the  harvest  and  farm  work. 
The  villain  tax  was  paid  in  four  installments  payable  at  intervals 
which  varied  greatly.  The  first  installment  was  due  on  December  i,  at 
the  end  of  two  months;  the  second  installment  after  three  months; 
the  third  installment  on  the  last  of  April  after  two  months  had 
elapsed;  finally  the  fourth  installment  was  due  on  October  i,  at  the 
end  of  five  months.  In  1780  there  was  added  only  exceptionally  a 
period  of  three  months,  the  months  of  October,  November  and  De- 
cember which  were  added  to  the  interested  excises  (which  were 
substituted  for  simple  lease)  to  be  reduced  later  on  to  twelve  equal 
months.  The  change  w^s  made  without  difficulty.  It  changed  all  the 
financial  operations  to  the  civil  year  beginning  with  January  i.  , 

lOI 


Method  of 
Reducing 
Period  of 
Preparation 


\V.;¥h^r    THE  BUDGET 

It  is?  possible  Ihat  the  advantage  of  such  a  change  cannot 
immediately  be  perceived.  As  a  matter  of  fact,  the  same  in- 
terval will  always  exist  in  case  the  opening  of  the  fiscal  year 
is  delayed  for  six  months  and  the  preparation  of  the  budget 
is  also  postponed  for  a  Hke  period  of  time.  The  solution  of 
the  question  lies  clearly  in  not  delaying  the  preparation  of  the 
budget,  but  in  preparing  it  always  about  the  same  time;  this 
would  result  in  shortening  by  six  months  the  interval  between 
the  preparation  of  the  budget  and  the  opening  of  the  fiscal 
year  in  July;  thus  a  shorter  interval,  by  six  months,  would 
henceforth  separate  the  preparation  of  the  budget  from  the 
date  of  putting  it  into  effect. 

It  has  been  said  that  the  regular  session,  the  only  one  dur- 
ing which  the  Chambers  can  devote  themselves  to  a  work  of 
such  long  duration  as  the  study  of  the  budget,  is  the  winter 
session.  The  other  half  of  the  year,  cut  short  by  vacations 
and  agricultural  operations,  is  poorly  adapted  to  prolonged 
legislative  discussions. 

"Who,  therefore,"  said  De  Serre,  "shall  determine  the 
opening  date  of  the  fiscal  year  ?  You,  gentlemen,  accord- 
ing to  the  rule  of  your  government.  On  the  other  hand, 
this  rule  depends  solely  on  the  customary  date  of  your 
session.  If  this  customary  date  should  fall  in  the  dead 
season,  that  is  the  winter — and  it  is  not  possible  to  doubt 
the  expediency  of  such  a  measure — then  this  date  alone 
determines  the  fiscal  year." 


Period  of 
Session  of 
Legislature 
Determined 
by  Season 


M.  de  Villele,  at  the  same  time,  explained  why  it  was  im- 
possible to  keep  the  Chamber  in  session  in  the  summer.  "By 
convening  the  Chambers  in  July  or  in  August,"  he  said,  "you 
would  exclude  from  the  Chambers  all  those  whom  it  is  most, 
important  to  see  occupying  its  seats;  I  mean  the  working 
and  producing  man.  The  representation  of  France  could  then 
be  entrusted  only  to  capitalists  or  Government  officers  or  to 
the  leisure  class  of  Paris."  (February  15,  1819.)  Duver- 
gier  de  Hauranne  also  said :  "A  Chamber  composed  of  land- 
owners, whose  places  of  residence  are  distant  from  Paris,  can- 
not be  convened  in  summer  time  during  the  season  of  agri- 
cultural work."     (February  12,  18 19.) 

If,  therefore,  the  most  intensive  legislative  work  is  accom- 
plished between  January  and  July,  that  is  in  winter  and  in  the 
spring,   the  legislature  must  devote   itself  during  this  busy 

102 


TIME  OF  PREPARING  THE  BUDGET 

season  to  its  primary  and  essential  function — that  is,  to  the 
study  and  the  vote  on  the  budgets.  Immediately  thereafter 
the  fiscal  year  should  begin.  Thus  the  preparation  of  the 
budget  being  completed,  as  at  present,  in  the  fall,  and  the  legis- 
lature having  studied  the  plan  of  the  Government  during 
the  winter  and  having  voted  on  it  in  the  spring,  the  fiscal  law 
should  begin  to  operate  from  the  ist  of  July,  reducing  the 
interval  from  fifteen  to  nine  months. 

To  begin  the  fiscal  year  in  July  would  mean  the  shortening 
of  the  actual  delay  by  six  months,  and  it  would  mean  a  con- 
siderable abatement  of  the  evil  of  which  everybody  is  com- 
plaining at  the  present  time. 

"This  date  of  July  i,"  said  the  statement  of  supporting 
arguments  for  the  budget  of  1819,  "has  been  selected  in 
order  to  put  as  short  an  interval  as  possible  between  the 
submitting  of  the  budget  and  its  going  into  operation."  ^ 
(Statement  of  Baron  Louis,  January  11,  18 19.) 

This  plan,  supported  with  fervor  by  the  Government  of  the 
Restoration,  met  with  very  active  opposition.  The  opposition 
was  favored  by  Article  49  of  the  Constitution  which  pro- 
vides : 

"The  land  tax  is  voted  only  for  one  year."  This  furnished 
the  pretext  for  discussion.  Because  of  the  fact  that  the  ex- 
igencies of  the  transitory  period  demanded  that  the  land  tax 
during  the  first  year  be  voted  for  a  period  of  eighteen  months, 
the  members  of  the  Chamber  who  were-  opposed  to  the  Min- 
istry, without  any  further  examination,  declared  the  reform 
to  be  unconstitutional. 2    The  plan  of  the  Ministry  succeeded 

^  The  Government  of  the  Restoration  brought  forth  several  sup- 
porting arguments  such  as  the  following:  "By  beginning  the  collec- 
tions in  July  the  first  months  will  be  used  for  publications,  notifications 
and  other  preliminary  formalities  which  will  give  time  to  the  land- 
owners to^et  in  their  crops.  Thus  the  first  term  on  which  the  taxes 
would  be  actually  collected  could  begin  at  the  time  of  the  first  fructifi- 
cation of  the  crops."     (Speech  of  Baron  Louis.) 

2  The  exaggeration  in  the  arguments  used  by  the  opponents  of 
the  plan  illustrates  sufficiently  the  heat  of  the  struggle:  "They  are 
forging  a  chain  for  the  nation, — sowing  anarchy, — ruining  our 
liberty;  if  you  are  violating  the  Charter  you  have  to  fear  the  same 
thing  for  yourself.  Remember  Bonaparte  on  the  i8th  of  Brumaire. 
The  disorder  introduced  in  our  finances  has  the  purpose  of  favoring 
speculators  and  foreign  capitalists." 

Political  passion  has  always  obscured  the  subject  of  the  discus- 

103 


THE  BUDGET 

finally  in  getting  a  small  majority  in  the  Chamber  of  Depu- 
ties. The  Pairs,  however,  clung  Judas-like  to  the  text  and 
rejected  the  reform  by  ninety-three  votes  to  fifty-four 
(March  4,  1819).^  Two  days  later,  a  group  of  sixty  new 
members  reestablished  the  majority  of  the  Government  in  the 
Chambre  des  Pairs,  but  the  plan  relating  to  a  reform  of  the 
fiscal  year  was  not  again  submitted  to  vote.  Until  1888  this 
plan  was  not  brought  up  again  for  consideration. 


Proposed 
Reform 
Adopted  by 
Other 
Nations 


Opening  Dates  of  the  Fiscal  Year  in  Foreign  Countries 

In  the  meantime,  almost  all  foreign  countries  have  adopted 
the  reform. 

Italy,  although  the  last,  is  at  the  head  of  the  list  because 
its  legislation  is  based  on  the  experience  of  nations  which 
have  already  adopted  the  practice;  also  because  Italy  from 
the  very  beginning  realized  the  merits  of  this  reform : 

"The  members  of  the  Commission  on  budget,  just  as  all 
other  deputies,  have  the  habit  of  taking  their  vacations  in 
the  summer  time  and  do  not  return  until  the  fall  when 
they  discuss  and  draw  up  the  report  hastily  and  abruptly. 
In  order  to  remedy  this  situation  it  would  be  sufficient 
•  to  make  the  fiscal  year  begin  on  April  i,  as  is  the  case 
in  England,  and  not  on  January  i,  as  is  the  case  in 
France.  Thus  the  three  winter  months  at  the  beginning 
of  the  year  would  be  devoted  to  useful  discussion  and 
serious  study  of  the  budget,  preceding  almost  immediately 
putting  it  into  operation."  (Opinione,  November  29, 
1877.) 

April  I,  which  is  the  date  used  in  England,  was  first  dis- 
cussed:   Magliani,  after  having  suggested  March  i,  joined 
Change  of       those  favoHng  July  i,  which  was  preferred  by  the  Commis- 
Date  in  Italy   sion  of  both  Chambers.     The  law  of  February   iy,   1884.^ 

sion  proper  in  the  eyes  of  the  opponents.  The  question  brought 
forth  by  the  ministry,  which  question,  by  the  way,  was  the  only  issue, 
in  a  most  inopportune  way  excited  minds  about  a  matter  which  should 
have  calmed  them. 

^  In  conformity  with  the  conclusions  of  the  commission's  report, 
drawn  up  by  the  Duke  de  Levis. 

2  The  law  of  February  17,  1884,  only  codified  the  total  of  the  new 
rules  of  accounting.  The  reform  dates  actually  from  the  law  of 
July  8,  1883. 

104 


TIME  OF  PREPARING  THE  BUDGET 

definitely  sanctioned  this  date.  Article  23  provides:  "The 
fiscal  year  shall  begin  on  July  i  and  end  on  June  30  of  the 
following  year."  As  a  result,  therefore,  on  July  i,  1884,  the 
new  fiscal  year,  1884- 1885,  was  inaugurated  after  an  excep- 
tional fiscal  period  of  transition  which  began  on  January  i 
and  ended  on  June  30,  1884.  Since  that  time,  in  our  neigh- 
lx>ring  countries,  only  eight  or  nine  months  at  the  most  sep- 
arate the  establishing  of  budget  estimates  from  their  reali- 
zation.^ This  was  what  the  plan  of  1819  attempted  to 
accomplish  in  France.  At  times,  according  to  tables  given 
in  the  footnote,^  the  interval  between  the  estimates  of 
the  Minister,  submitted  in  conforjnity  with  Article  73 
of  the  law  of  February  17,  1884,  and  the  opening 
date  of  the  Italian  fiscal  year,  is  reduced  to  only  a  few 
months. 

The  United  States  also  has  the  fiscal  year  run  from  July 

1  to  June  30.    Until  1844  the  fiscal  year  in  the  United  States, 

as  in  France,  coincided  with  the  calendar  year.     Beginning  Date 
with  1844,  the  financial  statements  of  the  United  States  men-   un?t"d^Sta"es 
tion  the  double  solar  year  which  each  fiscal  period  overlaps,   in  1844 
After  the  Secretary  of  the  Treasury  has  compiled  the  depart- 
mental estimates  and  submitted  his  budget  plan  to  the  perma- 
nent committee  of  the  House  in  December,  only  seven  or  eight 
months  elapse  between  the  preparation  of  the  Estimates  and 
their  being  put  into  operation. 

In  Prussia  the  fiscal  year  begins  on  April  i.     The  law  of 
February  29,  1876.  provides:   "Beginning  with  April  i,  1877,   April  i 
the  fiscal  year  shall  begin  on  the  ist  of  April  of  each  year   pjffn  ^^ 
and  shall  close  on  March  31."  ^     As  a  rule,  the  Minister  of   Prussia 
Finance  submits  his  financial  estimate  to  the  Landtag  some 

^  "Beginning  with  the  month  of  November  of  each  year  the  Min- 
ister submits  to  the  Parliament  the  budget  plan  for  the  following 
fiscal  period."     (Article  27  of  the  Law  of  February  17,  1884.) 

2  Fiscal  period  1887-1888,  statement  of  M.  Magliani  in  January       1887 

1889-1890,  "  "  "  Perazzi,    February    3,  1889 

1890-1891,  "  "  "  Giolitti,    December  16,  1889 

"          "        1 891-1892,  "  "  "  Grimaldi,    January        1891 

1893-1894,  "  "  "  Grimaldi,  February  II,  1893 

"          "        1 894- 1 895,  "  "  "  Sonnino,  December  10, 1893 

1900-1901,  "  "  "  Boselli,    November  28, 1899 

"           "        1904-1905,  "  "  "  Luzzatti,  December    9, 1903 

1908-1909,.  "  "  "  Carcano,  December    7,1907 

^  There  were  only  three  months  in  the  transition  period  from  Janu- 
ary I  until  March  31,  1877. 

105 


THE  BUDGET 


The  German 
Empire 


England 
Eliminates 
Uncertainty 
of  Estimates 
Altogether 


The  Budget 

or  Plan 

Submitted 

After 

Estimates 

Have  Been 

Considered 


time  in  January.  For  the  fiscal  year  1908- 1909,  for  instance, 
the  budget  plan  was  presented  to  the  Prussian  Chamber  on 
January  18,  1908,  by  M.  von  Rheinbaben.  Thus  only  three 
or  four  months  separate  the  preparation  of  the  budget  from 
the  date  it  is  put  into  operation. 

The  German  Empire,  its  financial  year  beginning  April  i, 
prepares  its  budget  a  little  earlier  than  the  individual  Federal 
States  of  Germany,  in  order  to.  give  the  latter  sufficient  time 
to  adjust  their  figures  according  to  the  total  amount  of  ma- 
triculate contributions  and  fiscal  refunds  determined  on  by 
the  Empire.  The  budget  statement  is  usually  made  in  the 
Reichstag  in  the  month  of  December:  it  was  made  on  No- 
vember 2;^,  1892,  for  the  fiscal  year  1893-1894;  on  November 
27,  1893,  for  the  fiscal  year  1894-1895;  on  December  7, 
1894,  for  the  fiscal  year  1895-1896;  on  December  3,  1895, 
for  the  fiscal  year  1896- 1897;  c>n  December  5,  1899,  ^^r  the 
fiscal  year  1 900-1 901 ;  and  on  November  28,  1907,  for  the 
fiscal  years  1908  and  1909.  This  makes  an  interval  of  about 
four  months  between  the  estimates  and  the  putting  of  the 
budget  into  operation. 

In  England,  for  quite  a  long  time,  the  fiscal  year  opened 
at  St.  Michael  (September  29).  Then  the  opening  date  of 
the  fiscal  year  was  changed  to  January  5.  In  1832  the  sup- 
plementary budget  postponed  this  date  until  April  4.  Certain 
adrninistrations,  however,  continued  to  count  from  the  former 
dates  until  1854,  when  the  fiscal  period,  beginning  on  April 
I  and  ending  on  March  31,  prevailed  generally  and  4efinitely. 
The  fiscal  year  1854- 185 5  inaugurated  the  new  regime  which 
is  now  in  existence. 

Usually  in  October  of  each  year  the  various  departments 
are  requested  by  a  circular  note  from  the  Treasury  ^  to  pre- 
pare their  Estimates.  These  Estimates  are  submitted  to  the 
House  of  Commons  in  February,  either  directly  by  the  com- 
petent ministers,  as  in  the  departments  of  the  Army  and  the 
Navy,  or  through  the  agency  in  charge  of  the  budget,  and 
under  the  control  of  the  Treasury,  so  far  as  the  other  min- 


^  This  circular  note  is  not  sent  to  the  Army  nor  to  the  Admiralty 
which,  as  we  have  seen,  preserves  in  that  way  a  certain  amount  of 
independence  from  the  Treasury.  Only  the  branches  of  civil  service 
receive  this  circular  note.  The  departments  of  the  Army  and  of 
the  Navy,  however,  also  prepare  the  estimates  in  the  month  of 
October,  but  do  not  usually  submit  them  personally  to  the  House 
of  Commons  until  February. 

106 


TIME  OF  PREPARING  THE  BUDGET 

isters  are  concerned.^  [After  the  Estimates  have  been  under 
consideration  for  several  weeks  in  committee  of  the  whole] 
the  budget  or  financial  plan  is  submitted  by  the  Chancellor  of 
the  Exchequer  [in  the  form  of  a  "budget  speech"].  This 
is  done  not  a  year  or  six  months  or  three  months  in  advance, 
as  is  the  case  on  the  Continent,  but  on  the  eve  and  in  general 
even  on  the  morrow  of  the  beginning  of  the  fiscal  year.  This 
is  the  remarkable  feature  of  the  English  system.^ 

Dates  are  given  below  on  which  the  budget  sj>eech  has  been 
made  in  the  House  of  Commons  by  the  Chancellors  of  the 
Exchequer  for  the  years  indicated: 


Budget  of  1888-1889 

"  1889-1890 

"  1891-1892 

"        "  1893-1894 

"  1898-1899 

"  1 904- 1 905 

"        "  1905-1906 

"  1907-1908 

"  1 908- 1 909 


March  26,  1888 

April  15,  1889 

"     23,  1891 

"     24,  1893 

"     21,  1898 

"     19,  1904 

"     10,  1905 

"     18,  1907 

May     7,  1908 


The  Chancellor  of  the  Exchequer  outlines  his  budget  at 
the  time  the  fiscal  period  is  about  to  begin  or  even  after  it  Parliament 
has   begun. ^      His   estimates   thus   become   contemporaneous  ^n^^a  Present 
with  the  events;  he  does  not  forecast  the  future,  but  he  sees  Condition 
it  [being  realized  each  day].     At  the  very  moment  he  an- 


^  The  fact  should  not  be  lost  sight  of  that  there  is  in  England  a 
"Consolidated  Fund"  composed  of  the  Civil  List,  of  the  debt,  etc., 
which  Consolidated  Fund  is  not  subject  to  annual  vote  and  which,  as  a 
result,  is  left  out  when  the  Estimates  are  prepared.  This  Consolidated 
Fund  will  be  described  later  in  detail. 

^  The  objection  is  that  this  system  of  estimating  and  of  voting 
during  the  fiscal  period  deprives  the  English  budget  of  its  essential 
quality  of  a  preliminary  estimate.  By  studying  this  point  of  objection 
in  a  future  chapter  we  shall  see  that  if  the  preparation  and  the 
voting  on  the  English  budget  do  not  precede  the  opening  of  the  fiscal 
year,  they  do  precede  the  putting  of  the  budget  into  operation. 

^  In  1885,  Mr.  Gladstone,  having  been  forced  to  resign  during  the 
discussion  of  the  budget,  the  Chancellor  of  the  Exchequer  of  the  new 
Cabinet  of  Lord  Salisbury,  Sir  Michael  Hicks-Beach,  made  another 
financial  statement  in  the  House  of  Commons  on  July  9,  1885,  that  is, 
three  months  after  the  beginning  of  the  fiscal  period.  For  the  fiscal 
year  1908-1909  a  delay  of  one  month  resulted  from  the  resignation 
of  the  Prime  Minister,  whose  place  Mr.  Asquith  took  in  April,  1908, 

X07 


THE  BUDGET 

nounces  his  budget,  the  facts,  to  which  the  figures  of  his 
budget  apply,  already  begin  to  materialize,  because  the  fiscal 
year  has  begun  or  is  at  the  point  of  beginning. 

Thus,  the  Estimates  of  revenues  and  expenditures  estab- 
lished on  a  known  and  permanent  basis — safe  from  remote 
speculations,  brought  face  to  face  with  actual  facts — do  not 
run  the  risk  of  being  upset  by  unforeseen  events;  moreover, 
experience  proves  that  English  budgets  work  out  to  the  end 
with  comparatively  few  or  no  disappointments.  We  shall  urge 
with  still  greater  emphasis  the  advantages  of  such  a  pro- 
cedure as  against  additional  appropriations,^  in  Chapter  XVII, 
which  is  specially  devoted  to  them. 

The  list  of  countries  whose  fiscal  year  does  not  coincide 
with  the  civil  year  could  be  further  extended.     We  have  al- 
April  1  or      ready  seen  that  great  countries  like  the  United  States,  Eng- 
mI^c' Usual    ^^"^'  P^^ssia,  Germany  and  Italy — since  1844,  1855,  1877  and 
Date  1884,  respectively — have  discontinued  the  beginning  of  the 

fiscal  year  with  January  i,  and  substituted  for  that  date 
either  the  first  of  April  or  the  first  of  July.  Norway,  Canada, 
Mexico,  Servia  and  Japan  have  also  adopted  the  first  day  of 
July  as  the  date  for  the  opening  of  the  fiscal  year.  Wiirtem- 
berg,  Denmark,  Roumania,  British  India,  etc.,  have  adopted 
the  first  of  April.^  In  all  these  countries  the  changing  of  the 
date  had  for  its  purpose  and  result  to  shorten  the  interval 
which  separates  the  preparation  of  the  budget  and  its  being 
put  into  operation,  with  a  view  to  making  the  estimates  as 
exact  as  possible.  This  interval,  reduced  to  six  months  or 
to  three  months  [in  other  countries],  is  completely  eliminated 
in  England.  If  the  suggested  reform  had  been  adopted  in 
18 1 9,  it  would  have  given  to  France  the  first  place  in  the 
above  chronological  list,  but  even  if  we  should  hurry  now 
we  would  be  only  late  comers.  The  other  European  coun- 
tries which  still  have  their  fiscal  year  coincide  with  the  civil 
year  are  Austria-Hungary,^  Belgium,  and  Holland. 

^  We  shall  see  that  additional  appropriations  in  England  were  of 
very  little  importance  for  a  long  time  and  at  times  there  were  none 
at  all;  and  that  the  total  of  expenditures  remains  often  lower  than 
the  estimated  figure. 

2  The  Minister  of  Finance  at  a  session  of  the  Chamber  of  Deputies 
of  June  I,  1888,  gave  a  complete  list  of  states  which  have  changed 
the  date  of  opening  of  the  fiscal  year. 

^  The  group  of  countries  whose  fiscal  year  coincides  with  the  civil 
year  running  from  January  i  to  December  31  includes  France, 
Austria-Hungary,   Belgium,  Holland,   Luxembourg,   Sweden,  Russia 

108 


TIME  OF  PREPARING  THE  BUDGET 


Effort  of 
Ribot  to 
Have  Date 


New  Plan  of  Changing  the  Date  of  the  Fiscal  Year 
IN  France  Rejected  in  1888 

The  attempt  of  18 19,  mentioned  above,  was  not  the  oilly 
one  which  has  failed  in  France.  More  recent  ones  deserve 
to  be  briefly  noted.  In  1882,  M.  Ribot,  reporting  on  the 
budget  for  1883,  recommended  the  change  of  the  date  of  the 
fiscal  year.  (Report  of  July  i,  1882.)  The  Minister  of 
Finance  opposed  by  answering:  "There  would  be,  as  a  mat- 
ter of  fact,  some  advantage  in  shortening  the  time  between 
the  date  the  budget  is  prepared  and  the  time  it  is  voted  on.  changed 
Investigations  could  be  made  to  determine  whether  it  is  pos- 
sible; to  change  the  date  of  the  opening  of  the  fiscal  period ; 
I  do  not  believe,  however,  that  a  great  improvement  would 
result."  (Chamber  of  Deputies,  July  26,  1882,  Speech  of 
M.  Leon  Say.)  There  the  incident  ended.  In  1888,  how- 
ever, M.  Peytral,  Minister  of  Finance,  submitted  an  official 
plan  "relating  to  changing  the  date  of  beginning  the  fiscal 
year."     (Session  of  April  24,  1888.) 

As  in  1 8 19,  the  vital  point  of  the  arguments  and  speeches 
of  the  Minister  was  the  advantage  of  bringing  as  close  to- 
gether as  possible  the  time  when  the  fiscal  law  is  prepared 
and  the  time  when  it  is  put  into  operation.  In  order  to  achieve 
this  purpose,  the  budget  plan  should  be  submitted  about  Janu- 
ary, which  does  not  mean  a  change  in  the  actual  situation. 
But,  instead  of-  letting  the  budget  plan  sleep  somewhere  in 
the  bureaus  and  the  commissions,  the  legislative  body  should 
immediately  undertake  the  examination  of  the  budget  plan, 
devoting  to  this  task  the  particularly  busy  session  during  the 
winter  and  spring  months.^  A  vote  on  the  budget  having 
been  taken,  putting  it  into  operation  would  begin  on  July  i. 

and  Finland,  Bavaria,  Saxony,  Baden,  Greece,  and  Switzerland,  as 
far  as  Europe  is  concerned.  (Dictionary  of  Finances,  published  un- 
der the  management  of  M.  Leon  Say;  Article  "Budget"  by  M.  Paul 
Boiteau.)  Spain  must  be  added  to  this  list;  by  virtue  of  a  law 
of  November  28,  1899,  Spain  discontinued  the  fiscal  year  from  July  i 
to  June  30,  and  from  1900  on  adopted  the  solar  year  as  the  fiscal 
year. 

^  [This  is  just  what  is  done  in  the  British  Parliament,  and  in  the 
British  Colonial  Legislature  with  the  Estimates.  They  are  taken 
up  at  once  openly  in  committee  of  the  whole,  instead  of  being 
referred  to  a  standing  committee  or  commission.  Then  by  April  i 
members  are  ready  to  act  intelligently  on  requests  for  expenditure 
authorizations. — Editor.] 

109 


THE  BUDGET 

The  interval  between  the  preparation  and  the  execution  of  the 
budget  would  thus  be  reduced  to  a  minimum  of  eight  or  nine 
months : 

"We  think  that  the  result  of  this  measure  will  be  that 
on  the  one  hand  the  budget  will  be  prepared  at  a  date 
nearer  to  the  time  when  it  will  be  put  into  operation,  and 
on  the  other  hand  that  its  estimates  will  be  more  sin- 
cere." (Speech  of  the  Minister  of  Finance,  Chamber  of 
Deputies,  June  i,  1888.) 

We  see  that  both  in  1888  and  1819  ^  the  same  causes,  viz. : 
the  uncertainty  or  the  lack  of  sincerity  in  the  original  esti- 
mates brought  forth  the  same  suggestions.  The  plan  ,was 
passed  by  the  Chamber  of  Deputies  on  June  i,  1888,  by  287 
votes  to  228.  In  the  Senate,  however,  following  the  ex- 
ample of  the  Chamhre  des  Pairs  in  181 9,  the  Commission  on 
Finances  began  to  formulate  decisions  hostile  to  the  proposed 
reform.  Then  the  Assembly — following  the  advice  of  M. 
Leon  Say,  who  reported  on  the  budget  after  a  short  debate 
— refused,  by  raising  the  hands,  to  enter  into  the  discussion 
of  the  article;  thus  no  ballot  was  taken.     (June  12,  1888.) 

The  principal  objections  which  were  formulated,  however, 
have  only  secondary  features.^    As  a  matter  of  fact,  nobody 

^  It  has  been  set  forth  both  in  1888  as  in  18 19  that  an  improve- 
ment of  the  "method  of  work"  was  the  thing  looked  for.  "There  is 
only  one  difference,  so  far  as  parliamentary  work  is  concerned,  be- 
tween the  year  which  begins  on  January  i  and  the  year  which  begins 
on  July  I :  this  difference  is  that  in  the  first  instance  the  vacations 
fall  in  the  second  half  of  the  year,  while  in  the  second  instance  they 
are  transferred  to  the  beginning  of  the  year.  In  the  first  instance 
the  vacations  interrupt  the  study  of  the  budget  at  the  most  decisive 
moment;  they  involve  a  loss  of  time  which  is  always  necessary  to 
get  the  work  under  way  after  a  long  interruption;  the  vacations 
leave  only  two  and  a  half  months  of  continuous  work  instead  of 
five  months  which  are  interrupted  but  a  brief  while  by  the  Easter 
holidays,  these  five  months  extending  from  January  i  until  June  30." 
(Report  of  M.  Camille  Pelletan,  Deputy,  May  28,  1888.) 

2  In  1888  as  well  as  in  181 9  politics  played  the  principal  part  in 
the  discussion  of  this  financial  question.  The  very  moment  that  this 
suggestion  came  from  a  radical  Ministry  the  party  opposing  it  com- 
bated it  with  closed  eyes  without  seeming  even  to  comprehend  its 
importance. 

The  newspaper  Le  Temps  wrote  as  follows:  "This  question  could 
have  suitably  occupied  the  leisure  time  of  the  Byzantines  at  the 
time  that  Byzantium  probably  had  a  decadent  budget.  ,  ,  ,  The  com- 

IIO 


TIME  OF  PREPARING  THE  BUDGET 

contested  the  proposition  that  there  was  need  to  remedy  the 
unsatisfactory  condition.  It  has  been  generally  recognized 
that  the  suggested  change  would  permit  the  legislative  body 
to  work  in  better  time  and  more  rapidly;  that  the  interval 
between  the  preparation  of  the  budget  and  of  putting  it  into 
effect  would  be  shortened  and  that,  as  a  result,  greater  ac- 
curacy of  estimates  would  obtain  very  much  to  the  benefit 
of  the  equilibrium  of  the  budget.  This  was  the  essential 
object  of  the  plan,  and  in  this  direction  the  question  seemed 
to  be  completely  solved. 

It  has  been  objected,  however,  that  by  making  July  i  the 
opening  date  of  the  fiscal  year,  the  coincidence  of  the  date  Objection  to 
of  putting  into  effect  the  budget  of  the  State,  of  the  depart e-  Beginning 
ments  and  of  municipalities  would  become  upset;  the  direct  Date 
taxes  could  not  possibly  l>e  made  to  coincide  with  a  new  scheme 
because  of  the  dates  of  sessions  of  the  Conseils  Generaux, 
and,  therefore,  the  old  dates  of  January  i  and  December  31 
should  be  kept  for  them.     All  these  objections  were  pointed 
out  by  the  Minister  of  Finance  in  the  various  articles  of 
his  plan.     From  then  on  the  uniformity  of  dates  will  cease 
to  exist  in  our  budgets. 

"The  Commission  on  Finances  attaches  a  very  great 
importance  to  the  uniformity  of  dates,  that  is,  that  all 
the  expenditures  and  revenues  of  the  budget  should  begin  . 
on  the  same  day  and  end  on  the  same  day.  The  uniform-  ^ 
ity  of  the  date  was  demanded  in  France:  the  Revolution 
of  1789  introduced  it  and  your  Commission  thinks  that 
it  should  be  preserved.  .  .  .  There  is  no  doubt  that  ab- 
stracting from  local  budgets,  the  double  dates  remaining 
only  in  the  general  budget,  would  cause  serious  incon- 
veniences. ...  By  preserving  the  double  date  it  would 
be  necessary  to  estimate  the  effect  of  a  crisis  upon  the 
payers  of  the  direct  tax  at  one  time  and  of  a  crisis  of 
possibly  a  totally  different  nature  upon  the  payers  of  the 

mission  having  the  honor  of  possessing  a  radical  majority,  has  imme- 
diately fallen  into  ecstasy  over  the  allurements  of  this  great  reform. 
The  question  whether  it  would  not  be  better  to  begin  walking  with 
the  right  foot  while  the  habit  is  to  begin  walking  with  the  left  foot 
was  the  problem  which  these  minds  without  any  elevated  view  assumed 
to  attack.  The  moderate  Republicans  have  a  hard  time  exerting 
themselves  to  find  the  benefit  of  such  a  change,  but  they  do  not 
succeed.  One  has  to  be  a  radical  to  grasp  this  superb  innovation." 
(Article  of  March  26,  1888.) 

in 


THE  BUDGET 

indirect  tax  at  another  time.  .  .  .  The  uniformity  of 
dates  is  a  very  important  principle  from  which  we  should 
not  depart.  The  Minister  of  Finance  limits  himself  to  a 
statement  that  he  does  not  attach  very  much  importance 
to  the  uniformity  of  the  date.  This  is,  however,  nothing 
else  than  a  simple  averment  which  does  not  seem  to  us  to 
have  much  value  as  long  as  it  is  going  to  be  based  only 
on  comparisons  with  foreign  countries.'*  (Speech  of  M. 
Leon  Say,  Senator,  June  12,  1888.) 

It  has  been  alleged,  moreover,  that  the  date  of  the  new 
fiscal  year  could  not  be  brought  into  harmony  with  the  sea- 
son of  public  works.  What  use,  for  example,  could  the  en- 
gineers in  charge  of  construction  or  repairing  work  on  roads, 
canals,  railroads,  bridges,  ports,  etc.,  make  of  appropriations 
put  at  their  disposal  only  on  July  i  after  the  year  is  half 
over  and  the  inclement  season  is  close  at  hand?  All  working 
establishments  begin  operations  in  the  Spring.  To  begin  to 
negotiate  with  contractors  in  July  would  mean  to  run  a  risk 
of  not  being  able  to  move  a  single  spade  of  dirt.  The  report 
made  to  the  Senate  insinuated  by  way  of  recapitulation  that 
the  plan  was  premature  and  that  the  best  plan  would  be  to 
shelve  it  again.  "Thus  we  shall  resolve  today  as  follows :  Let 
us  do  nothing,  because  the  plan  you  submit  amounts  to  noth- 
ing." A  more  complete  preliminary  inquiry  might  have  over- 
come these  objections.  Practice  would  have  overcome  the 
difficulties  raised  on  paper,  since  the  system  works  well  in 
foreign  countries. 


Advantages 
of  Practice 
for  Purposes 
of  Control 
Over  Ex- 
penditures 


The  Douziemes  Provisoires  in  Belgium 

In  case  no  change  of  date  for  the  beginning  of  the  fiscal 
year  is  made,  the  only  way  to  bring  the  date  of  the  prepa- 
ration of  the  budget  closer  to  the  date  of  putting  the  budget 
into  operation  is  to  borrow  the  system  of  douziemes  provi- 
soires (monthly  installments)  from  countries  which  practice 
it,  particularly  Belgium,  where  the  fiscal  year  runs  just  as 
in  France,  from  January  i  to  December  31.  A  subsequent 
chapter  will  give  more  details  as  to  how  the  procedure  of 
douziemes  provisoires  consists  of  voting  revenues  and  expendi- 
tures by  monthly  installments  during  the  fiscal  period  proper. 

In  France,  such  a  procedure  suggests  a  condition  of  dis- 
order and  irregularity,  in  the  thought  that  the  occasion  for 

112 


TIME  OF  PREPARING  THE  BUDGET 

its  use  occurs  unexpectedly,  as  a  result  of  delay,  for  reasons 
of  expediency  and  at  the  end  of  the  year.  In  Belgium,  on 
the  contrary,  the  douziemes  provisoires  is  an  integral  part^ 
of  the  machinery  of  financial  control.^  When  in  the  month 
of  December  the  Minister  of  Finance  submits  the  budget  plan 
[and  requests  the  enactment  of  the  revenue  proposals]  and  the 
temporary  appropriations  for  the  first  months  of  the  follow- 
ing year,  this  statement  which  everybody  anticipates  does 
not  cause  any  emotion  or  any  recrimination;  the  movement 
of  parliamentary  and  administrative  work  is  regulated  in 
accordance  with  this  institution. 

On  the  other  hand,  the  partial  allotments  [or  monthly  in- 
stallments], accorded  to  each  branch  of  service,  are  calcu- 
lated in  such  a  way  as  not  to  hinder  the  progress  of  long- 
time operations:  sufficient  installments  keep  public  works  go- 
ing in  conformity  with  the  exigencies  of  the  estimates  and  of 

^  In  1883  this  procedure  was  already  described  as  a  very  ancient  one 
by  the  Minister  of  Finance,  M.  Graux,  who  said  while  submitting  the 
budget  plans  for  1884:  "Criticism  has  been  voiced  repeatedly  in  the 
Chambers  with  regard  to  the  method  of  presenting,  previous  study, 
discussion  and  vote  on  budgets.  Some  of  the  criticisms  relate  to 
delay  in  submitting  the  budget  to  the  yearly  vote  by  the  Chambers. 
It  was  necessary  for  a  good  many  years  to  resort  to  temporary  appro- 
priations for  every  fiscal  period,  so  that  the  very  day  you  have  exam- 
ined and  voted  the  budget  the  latter  has,  to  a  large  portion,  been 
already  disbursed.  This  system  is  a  vicious  one;  the  result  of  this 
system  is  to  abolish  to  a  certain  extent  the  control  of  the  Chambers." 
(Speech  of  February  2,  1883.) 

2  According  to  the  Belgian  practice,  the  Minister  of  Finance  must 
submit  his  budget  plan  ten  months  before  the  opening  date  of  the 
fiscal  period.  This  provision  is  lived  up  to  so  far  as  the  formality 
is  concerned.  Later  on,  however,  in  the  months  of  November  and 
December,  the  Minister  of  Finance  submits  a  budget  in  form  of  a 
parliamentary  "speech,"  similar  to  the  speech  or  budget  statement 
of  the  Chancellor  of  the  Exchequer  in  England — this  speech  being 
delivered  on  the  eve  of  the  opening  of  the  fiscal  year,  with  all  the 
data  intended  to  serve  as  a  definite  basis  for  the  consideration  of 
the  budget  of  the  coming  fiscal  period. 

Following  this  statement  or  budget  speech  the  Belgian  Chambers 
vote  the  revenues  before  December  31.  Then,  during  the  course  of 
the  fiscal  period  proper,  they  proceed  without  haste  to  a  successive 
examination  of  each  part  of  the  request  for  appropriations,  providing 
at  the  same  time  by  means  of  doiisicmes  provisoires  for  the  continu- 
ation of  the  established  activities  of  the  government.  The  legisla- 
ture's study  of  the  different  departmental  estimates  ends  usually  in 
July  and  even  later,  and  the  complete  vote  on  the  financial  law 
occurs  about  the  middle  of  the  year  of  its  execution. 

113 


y 


THE  BUDGET 

the  contracts.^  Owing  to  this  arrangement,  which  may  be 
questioned  from  some  points  of  view,  the  estimates  are  up 
to  date,  can  be  relied  on  with  greater  certainty — are  as  com- 
plete as  is  possible  for  estimates  to  be  made. 

Necessity  of  Bringing  the  Estimates  Closer  to  the 
Actual  Facts  as  a  Basis  for  Financial  Planning 

Recapitulating,  we  may  say  that  according  to  the  time  of 
its  preparation  the  budget  exists  or  does  not  exist  in  the  com- 
plete sense  of  the  word. 

Prepared  at  a  date  too  far  from  the  time  of  its  going  into 
effect,  it  constitutes  only  a  rough  forecast — a  coarse  fabric 
through  which  intentional  and  unintentional  errors  may  slip. 
On  the  other  hand,  if  prepared  at  a  proper  time,  the  budget 
becomes  a  more  exact  instrument  of  control  over  revenues 
and  appropriations.  It  operates  with  compelling  force  on 
those  who  pass  orders  for  payment  as  well  as  on  account- 
able officers;  and  during  the  entire  period  of  its  operation 
the  budget  dominates  the  administrative  organization.  The 
authority  of  budget  figures  comes  from  their  reliability.  The 
countries  which  did  not  shrink  from  meeting  the  temporary 
difficulties  of  reform  in  budget  practice  can  justly  congratulate 
themselves. 

^  With  regard  to  the  possibility  of  transforming  the  dousietnes 
provisoires  into  a  regular  institution,  see  our  article,  "Douziemes 
provisoires,"  published  in  the  Journal  des  Economistes  of  February, 
1887.  See  also  Chapter  XV  of  this  book  on  the  subject  of  "Douziemes 
provisoires." 


114 


CHAPTER   V 

THE  FISCAL  PERIOD  AND  THE  ADMINISTRATIVE 

PERIOD 

The  Fiscal  Period:  Overlapping  Transactions;  Delayed  Obligations 
to  be  Met;  Principles  Governing  the  Accounting  Practice;  Regu- 
lations Governing;  Attempts  to  Define. 

The  Administrative  Period:  Distinguishing  Characteristics;  Deals 
with  Cash  Received  and  Paid  Out  with  Opening  and  Closing 
Balances;  "Annual"  and  "Personal"  Administrative  Periods. 

Advantages  of  Accounting  by  Fiscal  Periods;  Two  Advantages 
Specified ;  Inconveniences  of  the  System  of  Fiscal  Periods ;  Vicious 
Practices  Under  the  Old  Regime;  How  It  Was  Used  to  Multiply 
Officers;  Avoidance  of  Debt;  Delays  and  Their  Dangerous  Con- 
sequences; Method  of  Correcting  Abuses;  Care  Only  Required  to 
Prevent  Violations;  Disposition  to  Use  Lapsed  Balances;  Carry- 
ing Over  Excessive  Expenditures;  An  Encouragement  to  Delay; 
Attempts  to  Prevent  Delay;  Lateness  in  Getting  Reports  to  the 
Legislature. 

Accounts  by  Administrative  Periods  in  England  and  in  Italy: 
England  Abandoned  Fiscal  Periods;  Why  England  Does  Not  Suf- 
fer Abuses;  Advantages  of  Accounting  by  Administrative  Periods; 
Italy  Chooses  the  System  Used  in  England ;  The  Method  Commonly 
Used  in  Private  Business;  France  Requires  Private  Companies  to 
Adopt. 

Mixed  Reform  Recommended  by  Baron  Louis  in  1819:  Character 
of  Reform  Proposed. 

The  term  "fiscal  period"  can  best  be  understood  after  first 
considering  [the  annual  economic  period]  the  "year." 

The  Economic  Period — the  "Year" :  Public  revenues  and 
expenditures,  like  the  revenues  and  expenditures  of  individu- 
als cannot  go  on  indefinitely  without  being  closed  or  brought 
to  a  point  or  period  of  reckoning.  To  go  ahead,  receiving 
with  one  hand  and  spending  with  the  other  [without  periodical 
review],  would  mean  acting  in  a  prodigal  [thoughtless]  way, 
or  would  indicate  that  one  wished  to  conceal  the  actual  situa- 
tion from  one's  own  eyes.  In  order  to  see  clearly  one's  affairs, 
to  direct  them  in  a  prudent  way,  and  to  be  able  to  appreciate 
their  results,  it  is  necessary  on  certain  dates  to  recast  and  sum- 

115 


THE  BUDGET 

• 
marize  them,  to  group,  analyze,  classify  and  compare  one  re- 
sult with  another  and  then  start  a  new  period  of  expenditures 
[with  full  knowledge  of  the  significance  of  past  experience]. 
Commonly,  the  year  constitutes  such  a  lapse  of  time,  at  the 
end  of  which  the  periodical  reckoning  takes  place. 

The  Fiscal  Period: 

"All  nations  which  possess  a  rational  system  of  admin- 
istration have  limited  to  the  period  of  a  year  all  their 
operations  covering  revenues  and  expenditures.    This  cor- 

[ responds  with  the  natural  order  of  things,  because  nature 
reminds  us  each  year,  by  means  of  its  [seasonal]  prod- 
ucts, of  questions  of  public  and  private  expenditures. 
...  It  is  necessary  at  the  beginning  of  each  year  to  com- 
pare estimated  revenues  with  estimated  expenditures;  it 
is  equally  necessary  at  the  end  of  the  year  to  compare 
actual  revenues  with  actual  expenditures."  (Speech  of 
Lebrun,  in  the  Council  of  the  Elders  (Conseils  des  An- 
ciens),  8th  Vendemiaire  year  V  [Sept.  30,  1796]  of  the 
Republic.) 


It  is  hardly  possible  to  give  a  better  explanation  of  the  rea- 
son why  the  annual  period  is  the  most  appropriate  for  suc- 
cessfully summing  up  every  group  of  financial  operations. 
Overlapping  Since  the  revenues  and  the  expenditures  of  an  operating 
Transactions  year  can  by  no  means  complete  their  evolution  within  the 
limits  of  this  cycle,  and,  since  many  of  them  run  over  for 
purposes  of  liquidation  to  the  next  year,  it  was  necessary 
that  a  procedure  of  accounting  be  devised  to  connect  these 
delayed  operations  with  the  group  to  which  they  properly 
belong.  The  resulting  device  is  a  prolongation  of  the  year 
called  the  ''fiscal  period."  ^ 

When  a  private  individual  undertakes  a  necessary  expendi- 
ture, such,  for  instance,  as  repair  work  or  renovation  of 
his  furniture,  payable  out  of  current  revenues,  and  gives  or- 
ders to  his  upholsterer,  his  cabinet-maker,  etc.,  not  only  may 
the  work  be  delayed,  but  the  bills  of  the  tradesmen  may  also 
be  slow  to  come  in.  Then  the  customer,  not  too  anxious  to 
receive  them,  may  devote  a  certain  time  to  verifying  them 
after  they  reach  him.     In  brief,  seven,  eight  or  more  months 


Delayed 
Obligations 
to  be  Met 


^  See  later  the  definition  of  the  term  "fiscal  period"  and  its  his- 
torical origin  which  goes  back  to  the  Edict  of  October,  1554. 


116 


THE  FISCAL  PERIOD 

may  elapse  before  everything  is  definitely  arranged  and  set- 
tled. Notwithstanding  these  delays,  the  original  budgetary 
charge  is  the  same;  the  expenditure  is  still  one  that  affects 
the  year  to  which  it  is  chargeable  and  the  revenues  out  of 
which  it  must  be  met. 

Two  ideas  control  in  this  businesslike  method  of  account-  Principles 
ing :  the  first  idea  is  that  operations  begun  within  a  year  shall  <^verning 
be  recorded  as  a  part  of  the  year's  business,  the  necessary   ing  Practice 
time  being  allowed  for  their  final  completion ;  the  second  idea 
,is  that  the  time  required  for  the  liquidation  and  payment  in 
no  respect  alters  the  designation  of  the  year  which  is  affected 
by  the  expenditure  in  the  accounts.     These  rules  apply  to  the 
State  as  well  as  to  individuals.^ 

Like  an  individual,  the  State  must  wait  when  the  year 
has  expired  before  closing  its  accounts — that  is,  until  the 
works,  which  have  been  started,  shall  have  been  completed  and 
the  costs  have  been  determined  and  paid. 

It  is  necessary,  therefore,  to  include  a  complementary  period 

^  [In  this  relation  it  is  to  be  noted  that  all  of  the  intricacies  and 
difficulties  described  are  inherent  in  what  is  called  the  "cash"  basis 
of  accounting,  i.e.,  the  system  or  rriethod  of  attempting  to  keep  in- 
formed about  the  operations  of  a  business  or  other  enterprise  through 
recording  receipts  and  disbursements.  Modern  business  has  found 
a  way  without  resort  to  two  accounting  periods,  one  covering  the 
fiscal  year  and  the  other  used  to  wind  up  the  affairs  of  the  fiscal  year 
herein  called  the  "fiscal  period."  Simply  stated,  the  way  found  by 
business  men  is  this:  to  keep  "asset,"  "liability"  and  "operation" 
accounts,  the  initial  entries  in  which  show  the  inception  of  each 
transaction;  then  later  when  accounts  receivable  are  collected,  these 
are  liquidated  by  "cash  receipts" ;  when  accounts  payable  are  met 
they  are  liquidated  by  "cash  disbursements."  Cash  being  one  of  the 
"assets,"  a  full  record  is  kept  of  "cash  receipts"  and  "cash  disburse- 
ments" ;  but  the  "operations"  of  the  period  do  not  have  to  wait  for 
the  tardy  collections  and  payments — they  are  recorded  in  what  are 
called  "revenue"  (or  income)  and  "expense"  accounts.  Using  this 
method,  both  the  "cash"  accounts  and  the  "operation"  accounts  (the 
total  operations  of  the  period)  can  be  closed  and  the  results  re- 
ported without  waiting  until  the  last  collections  and  the  last  payments 
are  made  which  have  grown  out  of  the  business  of  the  year.  This 
method,  however,  does  not  take  into  consideration  funds  and  appro- 
priation devices  designed  for  exercising  control  pv^r  spending  officers 
as  distinguished  from  the  corporation  or  institution  as  a  whole.  The 
idea  of  the  "fiscal  period"  as  distinguished  from  the  "fiscal  year" 
avails  to  show  these  relations.  This  establishes  a  separate  group  of 
fund  and  appropriation  accounts  which  also  may  be  closed  at  any 
time  but  which  show  the  unexecuted  authorizations  and  the  delayed 
contracts  which  operate  as  encumbrances. — The  Editor.] 


THE  BUDGET 

beyond  the  operating  year,  which  is  attached  to  the  "fiscal 
year"  proper;  the  "fiscal  year"  plus  this  complementary  period 
is  called  the  "fiscal  period."  ^ 

We  shall  see  that  the  regulations  allot  a  longer  or  shorter 
space  to  these  delays,  according  as  they  are  caused  by  waiting 
for  the  completion  of  work  started,  by  the  liquidation  and 
passing  of  vouchers  for  payment,  and  by  paying  of  the  total 
of  expenditures,  or  by  collecting  the  revenues.  This  will  be 
explained  in  Chapter  XXVI.  But  it  is  already  clear  that  the 
words  "fiscal  period"  mean  an  extension  of  the  original  year, 
which  extension  is  used  for  getting  together  the  definite  and 
complete  results  of  the  [operating]  year  in  question. 

Thus  the  two  terms,  "fiscal  period"  and  "[fiscal]  year," 
are  so  linked  together  that  the  first  one  serves  the  second. 
The  fiscal  period  brings  together,  after  December  31,  all  the 
assets  and  liabilities  [revenues  and  expenditures]  which  be- 
long to  the  year  which  has  just  closed  in  order  to  connect 
them  with  that  year;  the  fiscal  period  establishes  the  definite 
balance  sheet  ^  for  the  year,  just  as  a  receiver  appointed  by 
a  court  collects  from  all  possible  sources  the  assets  and  lia- 
bilities of  an  insolvent. 

The  decree  of  May  31,  1862,  only  incompletely  expressed 
this  idea:  "The  fiscal  period  is  the  period  during  which  the 
provisions  of  the  budget  are  carried  out."  (Article  4.)  The 
fiscal  period  does  run  beyond  the  fiscal  year,  but  to  say  that 

^  M.  Leon  Say  has  said :  "The  word  'fiscal  period'  means  only  that 
in  order  to  manage  and  liquidate  business  matters  of  twelve  months, 
a  period  longer  than  these  twelve  months  is  required.  The  fiscal 
period  has  no  other  meaning."     (Senate,  November  9,  1888.) 

2  [Stourm  uses  the  word  "balance  sheet"  in  an  entirely  different 
sense  than  is  the  custom  among  English  speaking  people.  His  con- 
cept is  more  nearly  what  we  call  an  "operation  account";  more  ex-, 
actly  it  is  a  statement  of  "revenues  and  expenditures,"  or  where  the 
"cash"  basis  for  accounting  is  employed  it  is  a  statement  of  "receipts'* 
and  "disbursements"  with  a  balancing  figure.  When  Stourm  uses 
assets  and  liabilities  shown  on  the  account  of  a  "fiscal  period"  he 
means  amounts  accrued  for  the  benefit  of  the  period  and  liabilities 
incurred  during  the  period,  which  is  what  we  would  show  in  an 
operation  account.  As  has  been  said,  the  need  for  adopting  such 
a  device  as  a  "fiscal  period"  grows  out  of  a  method  of  accounting 
which  does  not  produce  either  a  true  "balance  sheet"  (a  statement 
of  assets  and  liabilities)  or  a  true  "operation  account"  currently. 
With  a  system  such  as  is  used  in  France,  however,  it  has  been  found 
desirable  to  adopt  the  device  described  in  order  to  get  a  correct  view 
of  the  operation  and  condition  of  funds  and  appropriations. — The 
Editor.] 

118 


THE  FISCAL  PERIOD 

the  fiscal  period  is  only  a  period  of  time  would  be  confusing 
the  effect  with  the  cause.  The  fiscal  period  has  nothing  to  do  Regulations 
with  the  carrying  out  of  the  provisions  [of  the  budget]  as  ^^^'^"^"g 
Article  4  erroneously  sets  forth,  repeating  Article  2,  which 
reads:  **The  financial  provisions  are  carried  out  during 
periods  of  time  called  periods  of  administration  or  fiscal 
periods."  As  a  matter  of  fact,  during  the  course  of  the  de- 
lays, incident  to  the  closing  of  the  fiscal  period,  the  question 
of  carrying  out  the  provisions  of  the  budget  is  lost  sight  of, 
the  only  thought  being  to  close  the  accounts. 

The  Commission,  charged  with  the  revision  of  the  decree 
of  May  31,  1862,  wisely  suggested  the  following  as  a  substi-  Attempts  to 
tute  for  the  old  formula:  'The  fiscal  period  is  the  total  of  ^^^°*^ 
assets  and  liabiHties  of  a  year."  ^  In  this  concept,  "fiscal 
period"  is  treated  as  a  personality,  which  makes  the  year 
whose  name  it  bears  the  subject  of  account  in  order  to  group 
rationally  the  totality  of  its  operations;  it  has  need  of  the 
complementary  period  beyond  the  limits  of  the  year  for  this 
and  no  other  reason.  The  decree  of  May  31,  1862,  as  a  mat- 
ter of  fact,  clearly  stated  this  point  of  view  in  Article  6: 
**Qnly  liabilities  incurred  and  assets  accrued  between  January 

^  The  minutes  of  the  Commission  on  the  revision  of  the  decree 
of  May  31,  1862,  declare:  "The  fiscal  period  in  itself  is  only  the  total 
of  assets  and  liabilities  of  one  and  the  same  year.  This  is  what  the 
decree  of  May  31,  1862,  states  correctly  in  Article  6.  Considered 
from  this  point  of  view,  the  fiscal  period  acquires  in  financial  par- 
lance its  real  significance:  It  no  longer  represents  a  conventional 
period  of  time ;  the  fiscal  period  again  becomes  what  it  should  be,  the 
means  of  comparing  the  budgetary  forces  of  the  State,  serving  the 
purpose  of  determining  for  each  successive  year  how  much  it  has 
produced  or  has  cost:  The  fiscal  period  is  the  positive  element  and 
the  reason  for  the  existence  of  the  accounts  of  ministers  and  for 
the  laws  of  regulation." 

The  Commission  on  revision  of  the  decree  of  May  31,  1862,  which 
was  constituted  in  1878  (Decree  of  Jan.  31,  1878),  has  published 
a  portion  of  its  minutes  from  which  the  above  in  quotation  is  taken. 
A  new  Commission  was  formed  by  decree  of  June  23,  1888. 

[This  confines  the  concept  of  the  "fiscal  period"  to  the  account. 
That  is,  in  the  accounts  each  year  is  set  up  as  a  separate  person  and 
all  transactions  which  add  to  its  resources  are  shown  on  one  side  and 
all  transactions  which  reduce  these  resources  are  shown  on  the  other 
side — the  account  remaining  open  till  the  last  transaction  is  closed. 
From  our  viewpoint,  this  should  be  the  theory  adopted  for  "fund" 
accounting,  but  not  for  "institutional"  or  "corporate"  accounting.  It 
is  to  give  emphasis  to  the  account  with  the  year  rather  than  the 
"period  of  time"  required  to  close  it  that  the  idea  of  impersonation 
is  adopted. — The  Editor.] 

.     "9 


THE  BUDGET 

I  and  December  31  are  considered  as  belonging  to  the  fiscal 
period,  deriving  its  name  from  the  year  in  question"^  [but  a 
longer  period  is  required  to  liquidate  and  close  the  account]. 
More  recently  the  law  of  January  25,  1889,  views  the  fiscal 
period  in  the  same  light :  ^  "Article  i .  The  assets  accrued 
and  the  liabilities  incurred  between  January  i  and  December 
31  of  any  budget  year  are  the  only  ones  which  can  be  con- 
sidered as  appertaining  to  the  budget  in  question." 

If,  however,  we  adopt  the  formula  of  the  Commission  and 
that  of  the  law  of  1889,  it  seems  necessary  to  add  a  few 
words  to  clarify  it.  The  idea  of  delay  is  of  importance, 
though  it  is  not  vital.^  It  was  of  more  importance  in  former 
times,  for  until  1822  no  limit  was  fixed  to  the  fiscal  periods; 

1  This  Article  6  from  which  are  taken  the  elements  of  a  sound 
definition  reproduces  Article  152  of  the  Ordinance  of  de  Villele  of 
Sept.  14,  1822,  while  Article  4  which  gives  rise  to  well-founded  criti- 
cism, results  from  the  initiative  of  the  official  editors  of  the  decree 
of  May  31,  1862,  and  has  no  other  origin. 

2  The  law  of  January  25,  1889,  had  in  view  shortening  the  actual 
delay  of  the  fiscal  period.  We  shall  have  occasion  to  speak  again 
on  that  subject  with  more  detail  in  Chapter  XXVI  of  this  book, 
which  relates  to  the  closing  of  fiscal  periods. 

The  plan  adopted,  after  the  first  reading  by  the  Chamber  of  Depu- 
ties, contained  an  Article  i  which  read  as  follows:  'The  fiscal  period 
covers  operations  of  revenues  and  expenditures  carried  out  either 
for  the  purpose  of  collecting  products  or  paying  off  liabilities  of  one 
and  the  same  budget  during  the  period  which  is  open  for  carrying 
out  the  provisions  of  said  budget.''  Although  this  wording  confirmed 
the  definition  made  by  the  Commission,  it  was  considered  by  the 
Senate  as  vague  and  dangerous:  "I  think,"  remarked  M.  Leon  Say, 
!'that  if  they  had  said,  The  fiscal  period  is  a  fiscal  period,'  they  would 
have  said  something  just  as  clear"  (Nov.  5,  1888).  As  a  result  the 
Commission  on  Finances  substituted  the  above  wording  which  was 
approved  on  second  reading. 

^M.  Leon  Say  spoke  in  the  Senate,  on  the  subject  in  question,  as 
follows:  *'What  I  would  want  to  know  is  whether  it  is  possible  to 
include  the  notion  of  the  duration  into  the  definition  of  the  fiscal 
period."  The  "duration"  of  the  fiscal  period  is  a  modern  idea,  as 
we  indicated  above  and  as  Chapter  XXVI  will  explain  more  in  detail. 
The  conception  of  an  indefinite  fiscal  period  is  more  perfect  in  theory 
than  the  conception  of  the  "duration"  of  the  fiscal  period.  A  good 
many  reservations  and  distinctions  would  have  to  be  made  before 
accepting  the  above  opinion  of  Leon  Say. 

It  is  not  useless  at  any  rate  to  recall  the  last  words  of  the  speaker: 
"It  .is  by  no  means  an  easy  task  to  find  a  good  definition  of  fiscal 
period.  The  best  proof  of  this  is  that  many  commissions  have  under- 
taken it,  but  they  have  given  us  different  definitions."  (Session  of 
Nov.  5,  1888.) 

120 


THE  FISCAL  PERIOD 

they  were  permitted  to  remain  open  indefinitely.  The  re- 
quirements of  accounting  alone  forced  de  Villele  in  1822  to 
close  fiscal  periods  at  certain  fixed  dates. ^  But  the  concep- 
tion of  an  indefinite  fiscal  period  still  persists.  The  fiscal 
period  is  certainly  not  a  delay,  but  it  involves  a  delay,  and 
quite  necessarily.  If  there  were  no  delay,  there  would  be 
disorder.  .  .  .  Therefore,  we  must  take  it  into  account  and 
say: 

The  fiscal  period  is  made  up  of  the  total  assets  and  liabili- 
ties of  one  and  the  same  year,  which  assets  and  liabilities 
result  either  from  operations  carried  out  during  the  course  of 
the  year  in  question  or  subsequently. 

It  would  be  l^etter  to  lay  aside  the  formula  of  the  Com- 
mission on  revision  and  to  discontinue  calling  the  fiscal  period 
*'the  total  of  assets  and  liabilities  of  a  year,"  as  this  is  not 
sufficiently  exact.  As  a  matter  of  fact,  the  fiscal  period  is 
not  the  total  of  assets  and  liabilities;  it  is  the  budget  rather 
which  deserves  this  designation.  The  fiscal  period  collects 
the  assets  and  liabilities;  it  does  not  constitute  them.  Possi- 
bly as  correct  a  definition  as  we  can  adopt  is  this :  **The  fiscal 
period  endeavors  to  adjust  the  assets  and  liabilities  afifecting 
a  single  year  [in  accounts  which  run]  beyond  the  limits  of 
the  year  in  question."  ^ 

Tlie  Administrative  Period:  In  the  accounts  the  phrase 
"fiscal  period"  is  opposed  to  the  phrase  ''administrative  pe- 
riod." Counting  by  administrative  periods  means  to  follow 
a  method  quite  different  from  that  of  which  we  have  just 
spoken.    The  decree  of  May  31,  1862,  says: 

"The  financial  provisions  are  carried  out  in  periods  of 
time,  which  are  called  either  'administrative  periods'  or 
'fiscal  periods.'  "  Then  if  adds :  "The  administrative  pe- 
riod includes  the  total  of  actions  taken  by  one  account- 
able officer  either  in  the  course  of  a  year  or  during  a  term 
which  corresponds  with  the  duration  of  his  functions." 

Although  this  official  definition  includes  several  inaccura- 
cies,^ let  us  use  it  for  the  time  being. 

^  Chapter  XXVI  will  deal  especially  with  the  subject  of  "closing  of 
fiscal  periods." 

2  [It  is  to  be  noted  that  Stourm  still  adheres  to  the  personifica- 
tion of  the  "fiscal  period." — The  Editor.] 

^  Thus  the  words,  "or  during  a  term  which  corresponds  with  the 

121 


THE  BUDGET 


Distinguish- 
ing Charac- 
teristics 


Deals  with 
Cash  Re- 
ceived and 
Paid  Out, 
with 
Opening 
and 

Closing 
Balances 


The  accounts  of  a  fiscal  period  are  contained  withi.n  a 
period  of  twelve  months,  supplemented  by  a  necessary  exten- 
sion which  allows  for  the  collecting  of  all  the  operations  re- 
lating to  that  period.^  As  for  administrative  periods,  there 
is  no  need  for  extensions  and  complementary  delays.  The 
administrative  period  begins  and  ends  on  a  fixed  date.  It 
strictly  registers  the  actual  operations  of  each  day,  with  the 
object  in  view  of  striking  a  cash  balance.  While  the  accounts 
of  a  fiscal  period  are  to  a  certain  extent  moral,  those  of  an 
administrative  period  are  material  accounts  dealing  with  cash 
balances.     They  have  no  other  object. 

The  first  item  in  the  account  of  an  administrative  period  is 
the  cash  balance  on  hand  at  the  end  of  the  preceding  period. 
Then,  the  operations  relating  to  revenues  and  expenditures 
are  carried  just  as  they  occur  from  day  to  day,  the  last  entry 
showing  the  final  balance  on  hand  in  cash  and  accounts  re- 
ceivable [when  the  account  closed].  The  cash  drawer  and 
the  accounts  receivable  contained  so  much  at  the  opening  of 
the  administrative  period.  So  much  has  been  paid  in  and  so 
murch  has  been  paid  out  during  the  period;  therefore,  there 
should  be — and  there  is,  as  a  matter  of  fact,  if  the  entries 
are  correct — a  balance  of  so  much  at  the  time  of  closing.  The 
simplicity  of  such  an  accounting  is  very  satisfying.  Every- 
thing is  based  on  clear  and  indisputable  material  facts;  on 
receipts,  expenditures,  and  on  nothing  else.  Consequently, 
all  accountable  officers  of  the  State  ^  make  out  and  submit 
their  accounts  by  administrative  periods.  The  provisions  of 
Article  3  of  the  Decree  of  May  31,  1862,  states  this  specifi- 
cally. 

There  are  two  categories  of  accounts  by  administrative  pe- 
riods :  the  account  by  annual  administrative  period  and  the 

duration  of  his  functions,"  are  absolutely  inexact,  because  an  adminis- 
trative period  never  includes  several  years.  The  words  "duration  of 
his  functions"  can  be  applied  only  to  the  case  when  the  personal  ad- 
ministrative period  lasts  less  than  one  year.  That  is  what  the  decree 
of  May  31,  1862,  was  undoubtedly  intended  to  say,  without  succeeding, 
however,  in  doing  so. 

^  Not  only  do  fiscal  periods  extend  beyond  the  end  of  the  year,  but  at 
times  they  open  before  the  beginning  of  the  year,  particularly  with 
regard  to  provisions  for  war.  We  have  not  mentioned  exceptional 
cases,  in  order  not  to  obscure  the  clearness  of  our  description. 

2  The  accountable  officers  in  France  make  out  accounts  by  adminis- 
trative periods  and  controlling  officials  by  fiscal  periods.  We  shall  see 
later  how  these  two  systems  are  coordinated  in  the  general  financial 
statement. 

122 


THE  FISCAL  PERIOD 

account  by  personal  administrative  period.     The  first  cate-  "Annual" 
gory  includes  operations  performed  between  January  i  and  "Personal" 
December  31,  provided  the  accountable  officer  has  carried  on  Administra- 
these  operations  without  interruption  throughout  this  period.   **^^  Periods 
The  second  category  embraces  only  that  portion  of  the  year 
in  which  the  accountable  officer  has  performed  his  duties,  in 
case  he  has  changed  his  residence,  been  recalled,  or  retired, 
or  had  died,  etc.,  during  the  year.     Thus,  as  many  accounts 
of  personal  administrative  periods  are  rendered  as  there  have 
been  incumbents  of  the  same  position  during  the  year.     If 
accountable  officers  succeed  each  other  rapidly — which  is  the 
case  at  present — the  year  might  be  subdivided  into  two,  three 
or  four  personal  administrative  periods. 

From  these  explanations,  the  following  definition — which 
is  more  precise  than  that  given  in  Article  2  of  the  Decree  of 
May  31,  1862 — can  be  deduced: 

An  administrative  period  includes  the  actual  operations 
relating  to  revenues  and  expenditures  [receipts  and  dis- 
bursements] which  were  carried  out  during  the  course  of 
a  year,  or  during  the  course  of  a  shorter  space  of  time, 
in  case  the  accountable  officer  has  performed  his  functions 
during  only  a  part  of  the  year. 


Advantages  of  Accounting  by  Fiscal  Periods 

After  having  defined  the  term  [fiscal  period]  it  is  proper 
to  set  forth  the  respective  merits  of  the  ideas  represented 
by  it. 

Why  did  France  adopt  the  system  of  accounting  by  fiscal 
periods,  while  other  countries,  such  as  England  and  Italy, 
make  up  their  accounts  by  administrative  periods?  How  does 
this  accounting  method  work  in  these  latter  countries?  What 
principle  should  we  follow? 

Let  us  begin  by  describing  the  advantages  of  the  method  J^o 
of  accounting  by  fiscal  periods.     These  advantages  are  ob-  spec?fied^*^ 
vious:  in  the  first  place,  accounting  by  fiscal  periods  permits 
the  establishing  of  true  budgetary  situations;  and,  in  the  sec- 
ond place,  it  permits  of  drawing  comparisons  between  these 
situations. 

Let  the  administration  adopt  the  method  of  accounting  by 
administrative  periods  for  the  benefit  of  the  accountants, 
those  officers  charged  with  the  custody  of  cash.    Those  who 

123 


THE  BUDGET 

administer  the  public  funds  have  still  other  demands  to  meet. 
There  is  not  only  the  question  of  controlling  the  treasuries, 
but  also  of  knowing  each  budget  year's  resources  and  lia- 
bilities for  the  country  as  a  whole.  As  a  result  one  must  be 
able  to  look  for  elements  belonging  to  each  budget,  even 
beyond  the  limits  of  the  year.  One  must  be  able  to  extract 
these  elements  even  from  subsequent  years,  in  order  to  carry 
them  back  to  the  period  to  which  they  belong.  This  can  be 
accomplished  only  through  accounting  by  fiscal  periods. 

This  method  also  permits  the  comparing  of  budgets  one 
with  the  other.  In  case  the  [accounts  of  the  year's]  opera- 
tions are  abruptly  closed  on  December  31,  a  delay  or  an 
advance  of  a  few  days  can,  without  any  rational  motive, 
change  the  results.  A  year  in  which  the  vouchers  and  pay- 
ments had  been  freely  anticipated  would  have  its  expendi- 
tures unduly  increased ;  another  year,  throuofh  inverse  pro- 
cedure, would  find  itself  benefited,  because,  intentionally  or 
otherwise,  large  payments  would  have  been  postponed.  The 
same  anomalies  inight  occur  with  regard  to  revenues.^ 

As  far  as  accounting  by  fiscal  periods  is  concerned,  a  homo- 
geneous grpuping  of  elements,  collected  either  in  the  course 
of  the  year  or  later,  insures  a  uniformity  in  the  composition 
of  the  budgets. 

Inconvenience  of  the  System  of  •  Fiscal  Periods:  Like 
everything  else  in  the  world  fiscal  periods  have  their  advan- 
tages offset  by  inconveniences.  These  are  of  two  kinds :  his- 
torical and  actual. 

Viewed  in  the  light  of  history,  the  system  of  accounting  by 
fiscal  periods  favored,  under  the  old  regime,  financial  opera- 
tions of  questionable  character.  By  prolonging  indefinitely 
the  closing  of  accounts  of  expired  years,  it  was  possible  to 
throw  a  veil  over  the  tardy  auditing  of  many  more  or  less 
suspicious  transactions  and  to  revive,  after  long  delays,  an- 
'  cient  or  doubtful  claims  for  the  benefit  of  intriguers  and 
favorites.  We  shall  see  that  Necker  denounced  these  machi- 
nations. 
Vicious  It  enabled  the  Royal  Government  to  multiply  the  offices  to 

Practices         |^  distributed   or  sold,  under  the  pretext  of  a  better  sepa- 

under  the  .  r     t        n        ^  •     i  rr-i  T-  r  i  •   i       t 

Old  Regime     rating  of  the  nscal  periods.     Ihe  edict  of  1554,  to  which  the 


1  We  are  stating  here  the  crudities  to  emphasize  the  pros  and  cons, 
reserving  the  explanations  till  later. 

124 


THE  FISCAL  PERIOD 

origin  of  the  term  "fiscal  period"  is  attributed,  declared : 
*'We  ordain  that  our  accounting  officers  shall  alternate  in  the 
'exercising'  of  their  employment."  Thus  each  year  was  per- 
sonified by  a  distinct  accountant,  who  performed  alone  all  the 
operations  even  beyond  the  duration  of  the  year.  The  even 
years  were  assigned  to  one  receiver,  the  odd  years  to  an- 
other; besides  these  "alternative  or  biennial"  receivers,  "tri- 
ennial" receivers  were  appointed,  thus  making  three  incum- 
bents for  one  office ;  this  was  done  under  the  pretext  of  better 
distinguishing  the  accounting  operations  and  of  preventing 
"the  officers  from  keeping  for  themselves  funds  and  moneys 
entrusted  to  them,"  to  quote  from  the  text  of  the  edict  of 

^554. 

The  old  regime  did  not  limit  itself,  as  some  humorous 
writers  do,  in  representing  the  fiscal  period  as  an  accountable 
officer;  but  it  did  give  to  the  fiscal  period  bones  and  flesh.^ 

This  personality  became  brutal  and  self -centered  as  human 
beings  sometimes  are.    For  example :  The  five  hundred  incum- 
bents of  the  204  receiverships  of  the  villain-tax  in  the  election   How  It 
districts  (more  than  double  the  number  actually  needed)  were  JJ^^uVf^f 
relentless  in  collecting  the  amounts  due  to  each  of  them,  over-  officers 
whelming  the  poor  taxpayers  by  the  cross-fire  of  their  exac- 
tions.    It  was  a  close  race  between  the  coming  and  the  going 
receiver  as  to  which  should    for  his  own  benefit   rifle  the 
pockets  of  the  taxpayers  of  the  villain-tax.    Bailiffs  and  their 
deputies  quarreled  over  the  attached  property — one  attaching 
it  for  arrears,  the  other  for  current  taxes.     The  lamentable 
picture  of  this  greedy  exploitation  fills  the  works  of  writers 
on  financial  topics  of  that  period.^ 

Turgot,  by  an  edict  of  August,  1775,  hastened  to  abolish 
the  ancient  alternating,  triennial  or  semi-triennial  offices  of 
receivers  of  the  villain-tax.  Necker  extended  this  reform  to 
those  portions  of  the  country  which  had  not  thus  far  bene- 
fited by  it.  But,  upon  his  retirement,  by  edict  of  January, 
1782,  Joly  de  Fleury,  his  successor,  reestablished  the  alter- 
nating receivers.    The  number  of  villain-tax  receivers  in  elec- 

^  M.  Leon  Say  has  specially  emphasized  this  character  of  personi- 
fied accounting  belonging  to  fiscal  periods  and  to  budgets.  (See  Ar- 
ticle, "Le  Budget  devant  les  Chambres,"  in  the  Revue  des  deux  Mon- 
des,  January  15,  1885.) 

2  The  question  of  villain-taxes  and  of  the  methods  of  their  collec- 
tion is  described  in  detail  in  our  book:  Les  finances  de  Vancien 
regime  et  de  la  Revolution. 

125 


•     THE  BUDGET 

tion  districts  was  thereby  increased  from  204  to  408,  under 
the  pretext  that  the  fiscal  periods  needed  to  be  distinguished 
by  personal  representatives. 

Such  was  the  case  with  offices  all  along  the  line.  In  Paris 
we  see  48  receivers  general  of  finances  against  24  receiver- 
ships general.^  Half  of  them  filled  the  position  on  even  years 
and  the  other  half  on  odd  years  in  order  better  to  specialize 
the  fiscal  periods. 

Under  the  old  regime  and  even  at  the  beginning  of  the 
[nineteenth]  century,  the  idea  prevailed  of  taking  advantage 
of  the  supposed  personality  of  the  fiscal  period  in  order  to  be 
able  to  say  to  the  creditors:  "You  are  the  creditors  of  a 
fiscal  period,  which  has  no  more  assets ;  wait,  therefore,  until 
some  act  of  grace  is  taken  for  your  benefit,  because,  as  it  now 
stands,  you  have  no  further  claim."  Through  this  fiction, 
the  creditors  of  the  State,  transformed  into  creditors  of  a 
fiscal  period,  had  no  chance  to  be  reimbursed  whenever  the 
resources  of  their  debtor  [the  fiscal  period]  became  exhausted. 
Every  coin  bore  the  stamp  of  a  certain  fiscal  period  and  could 
be  used  only  for  paying  the  expenditures  of  that  fiscal  period. 

Settlements  for  the  years  prior  to  1791,  1793,  and  the  year 
IV  of  the  Republic  were  successively  made  by  means  of  this 
procedure.^  More  recently,  the  Consulate,  finding  itself  con- 
fronted by  considerable  arrears  from  the  years  V,  VI  and 
VII,  addressed  the  holders  of  vouchers  for  payment  charge- 
able to  the  aforesaid  years,  as  follows:  "The  fiscal  periods 
in  question  are  bankrupt;  their  assets  are  exhausted,  hence 
you  can  make  no  further  claim."  From  sheer  kindness  and 
pity  Minister  Gaudin  gave  these  unfortunates  annuities  capi- 
talized at  the  rate  of  3  per  cent.,  or  about  one-third  (1/3) 
of  what  was  due  them.^  (Law  of  30th  Ventose,  year  IX.) 
As  the  year  VII  of  the  Republic  was  also  unable  to  meet  its 
liabilities,  Gaudin  showed  himself  a  little  more  generous  and 

^  Necker  reduced  the  number  of  these  receivers  general  from  48  to 
12,  declaring  at  the  same  time  that  6  would  be  sufficient.  (Edict  of 
August,  1780.)  Immediately  after  his  retirement,  Joly  de  Fleury  rees- 
tablished the  48  incumbents.     (Edict  of  October,  1781.) 

2  See  what  is  said  on  this  subject  in  Chapter  XXVI  of  this  book. 

8  Two  million  seven  hundred  thousand  francs  entered  in  the  ledger 
and  capitalized  at  the  rate  of  3  per  cent,  formed  the  capital  of  90,000,- 
000  allotted  to  the  creditors  of  the  years  V,  VI  and  VII  of  the  Re- 
public. The  dividend  was  at  that  time  very  far  from  par  as  it  was 
worth  only  30,  33  or  35  per  cent.  (Law  of  30th  Ventose,  year  IX, 
[Mch.  20,  1801].) 

126 


THE  FISCAL  PERIOD 

capitalized  the  annuities  at  the  rate  of  5  per  cent,  which 
represented  about  half  the  debt.^  This  was  obviously  little 
short  of  disguised  bankruptcy  for  which  Napoleon  was  latpr 
gravely  reproached.  He  did  not  hesitate,  however,  to  proceed 
in  the  same  way  in  18 13  with  regard  to  the  arrears  accumu- 
lated prior  to   1811.^ 

The  old  idea  of  the  fiscal  period  appears  either  in  the  form 
of  a  merciless  tax  gatherer  searching  out  the  year's  accounts, 
or  the  pitiful  form  of  a  creditor  of  the  State,  vainly  asking 
for  payment  of  amounts  due  from  a  bankrupt  Treasury. 
Past  history,  therefore,  was  none  too  encouraging  when  at 
the  beginning  of  the  Restoration  the  reform  of  the  system 
was  actively  advocated,  both  in  the  Assembly  and  in  the 
press.  ^ 

^  One  million  of  annuities  at  5  per  cent,  interest  at  par  was  allotted 
to  the  creditors  of  the  year  VIII.  See  our  book:  Les  Finances  du 
Consulate  1902. 

2  The  arrears  for  the  years  prior  to  181 1  were  declared  in  1813  to 
amount  to  30,000,000,  20,000,000  of  which  were  liquidated  by  virtue  of 
an  agreement  with  the  creditors,  by  allotting  them  1,000,000  of 
bonds  at  5  per  cent,  interest  at  par.  (Law  of  March  20,  1813.)  The 
market  price  of  the  5  per  cent,  annuity  fluctuated  between  20  and  30 
per  cent,  below  par. 

^  At  this  time  questions  of  accounting  interested  not  only  the  initi- 
ated but  also  the  Chambers,  where  they  incited  parliamentary  strug- 
gles. They  stirred  up  the  press  and  the  salons,  if  we  can  believe  the 
following  account  quoted  from  a  contemporaneous  pamphlet : 

"Lately,  in  one  of  the  most  elegant  salons  of  the  capital,  several 
deputies  engaged  in  discussing,  in  the  presence  of  a  group  of  beauti- 
ful women,  the  proposed  budget,  started  between  two  quadrilles  a 
scientific  dispute  on  accounts  by  fiscal  periods  and  accounts  by  ad- 
ministrative periods.  The  lady  of  the  house,  young  and  good  looking, 
paid  respectful  attention  to  this  grave  matter.  'But  you,  sir,'  she  said 
to  a  tall  thin  man,  'whom  I  recognize  by  your  sunken  cheeks,  by  your 
careworn  forehead,  by  your  severe  look,  to  be  an  inspector  of  finances, 
won't  you  please  give  us  your  opinion?' 

"  T  came  here,  madame,  to  take  part  in  your  amusement  and  not  to 
rnake  you  share  my  troubles;  but,  if  you  so  desire,  I  shall  at  your  own 
risk,  explain  myself  as  follows :  When  giving  money  to  your  servants 
every  day  for  the  current  expenses  you  are  operating  by  administra- 
tive period;  but  if  your  dear  husband,  desiring  to  know  how  much  this 
delightful  evening  is  going  to  cost  him,  adds  the  memoranda  of  the 
decorator,  the  caterer,  confectioner,  bandmaster,  he  will  make  an  ac- 
count by  fiscal  period  and  this  fiscal  period  will  not  seem  to  him  as 
pleasant  as  to  your  guests.  ... 

"  'When  in  the  course  of  making  your  toilette  an  unfortunate  chef 
comes  to  present  you  his  order  book,  you  cast  an  absent-minded  glance 
on  the  addition  for  the  week  and  the  month  and  you  pay  the  total 

127 


THE  BUDGET 


Delays  and 
Their  Dan- 
gerous Con- 
sequences 


Method  of 
Correcting 
Abuses 


In  all  probability  we  are  now  safe  against  the  possibility 
of  the  return  of  such  abuses;  hence,  we  can  view  the  records 
calmly. 

It  is,  then,  only  the  delays  incident  to  the  system  of  ac- 
counting by  fiscal  periods  and  the  dangerous  consequences 
growing  out  of  them,  that  are  deserving  of  notice. 

At  the  beginning  of  the  Restoration,  before  a  date  for  the 
closing  of  accounts  had  been  fixed,  Baron  Louis  said : 

"The  account  by  fiscal  period  is  never  terminated.  It 
can  never  be  closed,  unless  we  can  balance  against  it  justi- 
fiable bankruptcies.  Every  day  they  ask  me  to  pay  debts 
incurred  prior  to  the  Revolution;  we  have  twenty  years 
over  which  such  requests  can  be  made."  ^  (Speech  of 
Baron  Louis,  May  19,  1819.^) 

The  ordinance  of  Sept.  14,  1822,  cured,  as  far  as  possible, 
this  cardinal  defect  of  the  fiscal  period  method  of  accounting 
by  fixing  a  closing  date,  as  we  shall  see  later.^  Then  came 
the  law  of  January  29,  1831,  creating  the  quinquennial  statute 


without  concerning  yourself  over  the  bills  that  shall  come  in,  or  about 
the  amount  of  provisions  that  were  used  up:  You  are  thus  keeping 
an  account  by  administrative  period.  But  when  your  grandmother 
carefully  discusses  the  ledger  of  her  cook,  compares  the  consumed 
provisions  and  the  bills  still  to  be  paid  in  order  to  know  precisely  what 
her  table  costs  her  by  the  week,  by  the  month,  or  by  the  year,  or 
when  your  husband  calculates  the  total  of  expenditures  for  your 
household,  including  all  delayed  bills,  when  he  compares  his  expendi- 
tures with  his  annual  revenues,  in  order  not  to  encroach  upon  his 
principal,  both  your  grandmother  and  your  husband  keep  accounts 
by  fiscal  periods.'  The  violins,  by  beginning  to  play  a  waltz,  cut 
short  the  conversation."  (Newspaper  article,  quoted  in  the  Situa- 
tion des  Finances  au  Vrai,  by  M.  Bricogne,  May,  1819.) 

This  humorous  passage  describes,  as  well  as  a  didactic  treatise 
could,  accounts  by  fiscal  periods  and  by  administrative  periods. 

^  Twenty  years,  by  taking  as  point  of  departure  the  law  of  30th 
Ventose  of  the  year  IX  of  the  Republic,  for  which  date  the  arrears 
were  stopped,  as  we  have  said  above. 

2  At  the  end  of  his  speech  Baron  Louis  expressed  his  preference 
for  accounts  by  administrative  periods:  "The  accounting  by  admin- 
istrative period  must  audit  the  account  of  the  fiscal  period  and  must 
review  others.  I  may  add  one  more  argument  by  saying  that  account- 
ing by  fiscal  periods  is  not  sufficiently  conclusive  and  representative 
government  needs  display."  Later  on  in  this  book  we  shall  show 
in  a  more  detailed  way  what  organization  Baron  Louis  wanted  to 
substitute  for  the  system  of  fiscal  periods. 

3  See  Chapter  XXVI. 


128 


THE  FISCAL  PERIOD 

of  limitations  for  the  benefit  of  the  State.  These  two  inno- 
vations, establishing  "justifiable  bankruptcies"  were  practi- 
cally those  demanded  by  Baron  Louis  in  1819.  They  were, 
without  doubt,  important,  even  capital,  measures.  But,  from 
the  special  point  of  view  of  delays,  which  interests  us,  they 
succeeded  only  in  mitigating  the  evil,  reducing  its  scope,  with- 
out abolishing  the  evil  itself. 

Delays,  as  a  matter  of  fact,  are  inherent  in  the  system  it- 
self, for  the  fiscal  period  necessarily  involves  matters  more  or 
less  prolonged  beyond  December  31,  due  to  the  completing  of 
work  begun,  the  necessity  for  auditing  and  paying  of  current 
claims.  These  delays  have  undoubtedly  been  regularly  short- 
ened since  1822,  and  the  law  of  January  25,  1889,  has  defi- 
nitely reduced  them  to  a  minimum  by  fixing  January  30  as 
the  date  for  completing  works  under  way;  March  31  as 
the  last  date  for  auditing  and  vouchering;  April  30  as  the  last 
date  for  making  collections  and  payments.^  This  results  in 
a  delay  of  several  months,  after  December  31,  devoted  to 
winding  up  the  operations  of  the  year.  The  interval  during 
which  two  fiscal  periods  co-exist  opens  the  door  for  all  kinds 
of  abuses  which  constitute  possibly  the  greatest  objection  to 
the  system  of  fiscal  periods  [as  it  now  operates]. 

There  is,  as  a  matter  of  fact,  a  great  temptation  during  the 
first  few  months  of  each  year,  when  the  possibility  of  passing 
orders  for  payments  to  be  charged  against  the  preceding  year  Care  only 
still  remains  open,  to  absorb  the  balances  of  appropriations  pr^"ent  ^^ 
which  are  still  available.  Why  should  these  balances  be  an-  violations 
nulled  when  so  many  branches  of  service  need  money?  Why 
should  not  vouchers  be  passed  when  the  time  limit,  ending 
March  31,  has  not  yet  expired?  There  can  be  no  doubt  that 
posthumous  vouchers  for  payment  can  be  charged  only 
against  works  completed  prior  to  December  31 ;  and  the  treas- 
uries would  not  recognize  vouchers  for  payment,  the  dates  of 
which  on  their  face  exceeded  the  regulation  time  limit.  But 
is  there  no  way  to  fix  dates?  It  is  only  necessary  that  the 
memoranda  and .  bills  shall  leave  sufficient  space  for  the  Gov- 
ernment to  enter  discreetly  the  regulation  figures.  This  would 
suffice  to  put  the  contractors  on  notice  in  advance,  constituting 
an  underhanded  agreement  with  them.     This  is  certainly  far 

1  The  details  concerning  the  delays  of  closing  the  fiscal  period, 
which  delays  were  determined  by  the  law  of  January  25,  1889,  are 
given  in  Chapter  XXVI. 

129  1 


THE  BUDGET 


Disposition 
to  Use 
Lapsed 
Balances 


from  being  right,  but  it  is  practiced,  and  even  quite  often,  as 
the  Cour  des  Comptes  has  discovered : 

"Everybody  knows  who  has  even  a  little  knowledge 
of  governmental  practices,  that  the  administrations  do  not 
scruple  in  incurring — after  December  31  and  until  the 
closing  of  the  fiscal  period — new  expenditures  in  viola- 
tion of  law.  Thus  all  the  appropriations  for  the  first  year 
are  exhausted,  in  order  that  none  shall  be  permitted  to 
lapse.  The  Cour  des  Comptes  has  repeatedly  pointed  out 
charges  made  wrongfully  against  a  fiscal  period  during 
the  latter's  complementary  lapse  of  time.  These  prac- 
tices occur  again  and  again  by  virtue  of  a  tradition  which 
is  stronger  than  the  ministers  themselves."  (Report  of 
the  Deputy,  George  Cochery,  on  the  subject  of  the  fiscal 
period,  March  26,  1887.)  "In  order  to  make  this  opera- 
tion possible,  items  of  expenditure  are  concealed  or  an 
understanding  is  reached  with  the  contractors  by  virtue  of 
which  they  turn  in  blank  memoranda."  (Report  of  Dep- 
uty Felix  Faure,  on  the  subject  of  regulation  of  the  fiscal 
period  of  1882,  on  March  3,  1890.) 


Carrying 
over 

Excessive 
Expenditures 


Thus  the  prolongation  of  delay,  inherent  in  the  system, 
favors,  in  the  first  place,  an  abuse  of  the  appropriations, 
which  fact  has  justly  given  to  the  fiscal  period  the  name  of 
the  grave  of  annulments.  Furthermore,  the  juggling  during 
the  first  months  of  the  following  year  with  the  operations  of 
the  previous  year,  permits  conversely  the  charging  of  the 
excess  of  expenditures  for  the  fiscal  period  which  has  elapsed 
against  the  appropriations  of  the  fiscal  period  just  beginning 
and  which  at  this  time  of  the  year,  is  well  provided  with 
funds.  There  is  no  doubt  that  some  day  an  embarrassing 
amount  of  arrears  will  accumulate. 


"According  to  observations  made  by  the  Cour  des 
Comptes,  certain  branches  of  the  service  have  the  habit  of 
transferring  the  expenditures  which  cannot  be  paid  dur- 
ing the  year  in  which  they  are  incurred  to  the  succeed- 
ing fiscal  periods.  These  items  are  subsequently  charged 
against  the  first  appropriations  allotted  during  the  next 
year.  By  thus  accumulating  unpaid  claims,  a  considerable 
amount  of  arrears  may  some  day  arise  unexpectedly." 

130 


THE  FISCAL  PERIOD 

(Report  of  the  Deputy,  M.  Antoine  Perrier,  on  the  reg- 
ulation of  the  fiscal  period  1886,  March  21,  1891.) 

Finally,  the  last  but  not  the  least  grave  objection  to  the  A"  Encour- 
system  of  fiscal  periods  results  from  the  unavoidable  slow-  D^^i^y" 
ness  of  compiling  the  accounts.  The  very  moment  it  becomes 
necessary  to  discriminate  among  the  facts  pertaining  to  two 
different  years — in  order  to  find  which  facts  really  belong  to 
the  period  for  which  one  wishes  to  draw  up  a  balance  sheet 
[statement  of  revenues  and  expenditures],  such  a  procedure 
always  causes  considerable  delay,  particularly  so  in  view  of 
the  magnitude  of  the  budgets.  Many  expenditures — ^incurred 
at  a  distance  and  even  in  France — when  complications  arise, 
cannot  easily  be  recognized  and  separated  from  the  mass  of 
figures  on  a  certain  date.  Every  minister  finds  more  or  less 
plausible  excuses,  and  alleges  circumstances  beyond  control, 
in  order  to  justify  his  delays;  thus  the  Minister  of  the  Navy 
sets  forth  the  fact  that  his  vessels  are  scattered  all  over  the 
sea,  in  order  to  explain  the  delay  of  the  daily  report  on  ves- 
sels; the  Minister  of  War  explains  the  delay  of  statements 
concerning  troops,  by  the  fact  of  the  troops  being  in  camp 
or  under  way  outside  of  continental  France;  the  Minis- 
ter of  Colonies  states  that  the  delay  in  the  issue  of  the  pay- 
roll of  officials  is  occasioned  by  their  being  scattered  to 
the  four  quarters  of  the  globe;  the  Minister  of  Foreign 
Affairs  declares  that  he  is  delayed  in  making  statements 
of  salaries  and  expenses  for  his  diplomatic  and  consular 
personnel  by  the  latter's  residence  abroad;  the  Minis- 
ter of  Finance  explains  that  he  is  delayed  by  the  slowness 
of  the  return  of  vouchers  of  his  annuitants  and  pensioners, 
etc.  , 

The  legal  dates  of  official  presentations,  as  set  forth  by  Attempts  to 
the  laws  for  the  regulation  of  the  budgets,  reveal  the  inevita-  Delay" 
ble  slowness  of  these  operations  in  connecting  the  expendi- 
tures with  the  proper  fiscal  period.  By  virtue  of  the  provi- 
sion of  the  law  of  July  9,  1836,  the  plans  of  regulation  were 
to  be  submitted  to  the  Chambers  during  the  first  two  months 
of  the  third  year  of  the  fiscal  period.  According  to  the  new 
law  of  January  25,  1889,  this  was  to  be  done  thereafter  "at 
the  latest  at  the  opening  of  the  regular  session  of  the  Cham- 
bers which  follows  the  closing  of  the  fiscal  period,"  or,  in 
other  words,  about  the  beginning  of  January  of  the  third  year 
of  the  fiscal  period.     (Article  6.)     It  can  plainly  be  seen  that 

131 


THE  BUDGET 


Lateness  in 
Getting 
Reports  to 
the 
Legislature 


even  observing  the  new  regulations/  the  accounts  for  the 
year,  the  operations  of  which  have  to  be  controlled,  cannot 
be  submitted  to  the  legislative  body  earlier  than  twelve 
months  after  the  end  of  the  year  in  question. 

The  Cour  des  Comptes  has  to  produce  its  general  state- 
ment on  May  i,  following  the  close  of  the  fiscal  period  (Ar- 
ticle 7  of  the  law  of  1889) ;  that  means  one  year  and  four 
months  after  the  end  of  the  [fiscal]  year  in  question;  and, 
as  the  report  of  the  Cotir  des  Comptes,  annotated  by  replies 
from  the  various  administrations,  is  published  much  later, 
the  legislative  body  is  not  effectively  equipped  with  the  facts 
necessary  for  its  control  work  until  two  or  three  years  after 
the  end  of  the  year  the  operations  of  which  it  seeks  to  verify. 
(See  speech  of  M.  Ernest  Boulanger  in  the  Senate  on  the 
same  subject,  March  25,  1895.)  The  result  of  this  system  is 
that,  by  trying  to  render  accounting  too  perfect,  it  runs  the 
risk  of  rendering  it  void,  as  the  control,  in  order  to  be  effi- 
cient, must  follow  the  facts  as  closely  as  possible.^ 


Accounts  by  Administrative  Periods  in  England  and 

IN  Italy 


In  view  of  this  last  objection,  lack  of  expedition,  some  of 
the  neighboring  countries — viz. :  as  old  a  nation  as  England 
and  as  young  a  nation  as  Italy — have  repudiated  the  system 
of  fiscal  periods,^  and  adopted  the  system  of  accounting  by 
administrative  periods. 


^  For  a  long  time  the  delays  of  officials  in  submitting  the  plans  of 
regulation  reached  the  average  of  one  year.  In  1888  the  delay  was 
only  27  days;  in  1889  the  delay  disappeared  almost  completely. 
The  bills  of  regulation  submitted  on  the  required  dates  are  still, 
however,  very  incomplete.  Thus  the  accounts  of  the  ministers  are 
generally  not  attached;  the  general  statement  as  to  the  transferring 
of  accounts  is  lacking;  the  general  account  of  finances  is  still  in  the 
course  of  preparation  and  so  is  the  final  account  of  revenues;  the 
minutes  of  the  Commission  on  Ministerial  Accounts  are  not  edited, 
etc.    See  Chapters  XXIX  and  XXX  on  this  subject. 

2  These  remarks  will  be  treated  more  in  detail  in  Chapter  XXX. 

^  Belgium  keeps  accounts  by  fiscal  periods,  as  does  France.  By 
virtue  of  the  law  on  accounting  of  May  15,  1846,  every  year  is  pro- 
longed untilthe  following  31st  of  October  for  the  liquidation  of  the 
operations.  Prussia  also  accounts  by  fiscal  periods,  the  only  differ- 
ence being  that  the  latter  country  extends  the  year  by  only  two  and 
a  half  months. 


136 


THE  FISCAL  PERIOD 

In  England  only  those  funds  [receipts  and  disbursements]    England 
which  enter  or  leave  the  Exchequer  ^  between  April  i  and  pi^caf  °"^** 
March  31  form  the  annual  budget.     The  accounts,  as  well  as  Periods 
the  budgets,  include  only  the  operations  actually  performed 
within  the  twelve  months,  with  no  extension  of  time.     There 
is,  therefore,  no  fiscal  period  in  England,  and  what  we  have 
said  on  the  subject  does  not  apply  to  that  country.^ 

At  first  glance,  this  procedure  of  rigorously  establishing 
accounts  from  date  to  date  seems  out  of  place  in  the  budget 
of  a  great  State,  inasmuch  as  we  have  said  above  that  only 
accounting  by  fiscal  periods  can  furnish  true  figures — figures 
susceptible  of  comparison.  Why  then  does  England  consent 
to  be  deprived  of  these  advantages?  And  does  not  account- 
ing by  administrative  periods  afford  opportunity  for  many 
abuses?  And  in  order  to  favor  the  current  budget  unduly 
may  not  the  ministers  postpone  heavy  payments  until  the  end 
of  the  year?  And  conversely,  cannot  the  Chancellor  of  the 
Exchequer  anticipate  revenues  for  the  benefit  of  the  present 
equilibrium  ?  A  simple  misplacing  of  documents,^  an  advance 
or  a  delay  of  a  few  days,  is  sufficient  to  change  the  financial 
statement  materially.  The  temptation  to  abuse  becomes  so 
strong  that  in  France  it  would  be  deemed  irresistible. 

^  The  word  Exchequer,  which  we  define  more  fully  further  on,  sig- 
nifies the  public  treasury. 

2  [In  England]  accounting  by  administrative  periods  has  been  in- 
troduced consecutively  and  definitely  as  follows:  In  1833  in  the 
Navy,  in  1846  in  the  Army,  in  1854  in  the  Revenue  Service,  in  1862 
in  Civil  Services. 

^  In  1882  M.  Leon  Say  thus  emphasized  the  difference  existing 
between  the  English  system  of  accounting  and  the  French  system: 
"Our  public  accounting,"  he  said,  "is  not  organized  in  the  same  way 
as  the  accounting  system  of  England.  We  regulate  our  affairs  by 
fiscal  periods.  We  think  that  not  only  should  we  try  to  find  out  the 
amount  of  money  which  is  going  to  come  out  of  our  treasuries  be- 
tween January  i  and  December  31,  but  that  we  should  also  know  the 
expenditures  actually  made  in  the  course  of  the  year  and  the  reve- 
nues which  apply  to  the  same  year.  It  is  a  kind  of  liquidation  which 
we  make  from  year  to  year.  ...  In  the  English  system  of  account- 
ing the  procedure  is  different:  If  an  expenditure  is  not  made  in  one 
year  then  the  expenditure  to  be  made  is  charged  against  the  follow- 
ing year."  In  another  part  of  the  same  speech  M.  Leon  Say  added : 
"It  is  enough  not  to  carry  out  a  large  payment  of,  for  instance,  ten 
millions,  on  December  31,  and  to  carry  it  forward  to  the  ist  of 
January  in  order  to  ease  up  the  fiscal  period  just  closing  and  to 
upset  the  following  fiscal  period."  (Speech  of  M.  Leon  Say,  Min- 
ister of  Finance,  July  26,  1882.) 


THE  BUDGET 


Why 

England 
Does  not 
Suffer 
Abuses 


Fortunately,  such  is  not  the  case  in  England.  In  the  first 
place,  the  very  fact  that  fraud  is  so  easily  detected  and  so 
easily  committed,  causes  a  rigid  control.  The  moment  fraud 
is  suspected,  it  is  looked  for,  and,  therefore,  when  commit- 
ted, it  is  certain  of  discovery.  The  "Appropriation  Accounts" 
— drawn  up  annually  by  the  chiefs  of  service  who  issue 
vouchers  in  every  ministry,  controlled  by  the  Treasury  and 
endorsed  by  the  auditor  and  Comptroller  General — do  not  fail 
to  disclose,  particularly  to  watchful  eyes,  a  fraudulent  entry 
of  payments  or  revenues  made  or  received  at  the  end  of  the 
year.  This  system  works  so  much  better  because  the  prox- 
imity of  the  facts,  to  which  the  accounts  refer,  increases  the 
perspicacity  of  the  auditor.  Then — and  this  is  probably  the 
best  argument — such  practices  are  not  followed  by  our  neigh- 
bors. They  are  almost  unknown,  and  no  Cabinet  would  think 
of  resorting  to  them.  The  English  Ministry  and  Parliament 
are  not  antagonistic  to  each  other  as  in  France.^  The  Eng- 
lish Parliament  undoubtedly  exercises  great  precaution  in 
dealings  with  the  Crown;  but  it  does  not  take  a  defiant  atti- 
tude toward  the  Cabinet,  which  comes  from  its  midst.  The 
Cabinet,  on  its  part,  has  never  abused  the  great  confidence 
which  the  House  of  Commons  places  in  it.  The  question  of 
possibility  of  abuses  and  frauds,  without  overlooking  its  im- 
portance in  other  countries,  does  not  exist  in  England. 

Moreover,  the  system  of  accounting  by  administrative  pe- 
riods, if  honestly  carried  out,  is  capable  of  yielding  results 
susceptible  of  comparison  one  year  with  another.  As  a  mat- 
ter of  fact,  English  budgets,  at  the  end  of  each  twelve  months, 
show  balances  carried  over  from  the  preceding  year  which 
closely  approximate  the  balances  reported  for  the  year  which 
follows.  What  we  call  the  second  year  of  the  fiscal  period  is 
balanced  with  small  differences,  from  one  administrative  pe- 


^  It  is  hard  to  determine  the  causes  of  the  antagonism  existing  in 
France  between  the  legislative  and  the  executive  powers.  Could  it 
be  a  remnant  of  old  monarchial  encroachments  which  have  sur- 
vived the  change  of  the  regime?  It  is,  however,  probably  the  pre- 
ponderant influence  of  the  bureaus  of  the  different  ministries  which, 
justly  proud  of  their  power  and  their  permanence,  look  with  a  de- 
fiant and  hostile  eye  at  the  blundering  mobility  of  the  legislative 
body  and  influence  the  mind  of  the  Minister  against  the  latter.  The 
aggressive  mood,  however,  comes  often  from  the  legislative  body 
itself,  which,  anticipating  the  old-time  hostility  on  the  part  of  the 
bureaus  against  itself,  spontaneously  treats  these  bureaus,  as  well  as 
the  Ministers  who  are  influenced  by  them,  as  enemies. 


134 


THE  FISCAL  PERIOD 

riod  to  another.^  The  "Finance  Accounts  of  the  United 
Kingdom"  show  that  the  balances  and  bills  which  still  re- 
main to  be  collected  from  the  taxpayers  on  March  31 — that 
is,  on  the  eve  of  the  opening  of  the  fiscal  year — correspond 
within  the  margin  of  a  few  millions  to  those  which  will  have 
to  be  collected  from  the  taxpayers  on  the  last  day  of  the 
opening  fiscal  year.^  In  the  same  way  the  supplementary  ap- 
propriations in  "supply  services"  are,  to  a  certain  extent,  coun- 
terbalanced by  appropriations  which  lapse.  Thus,  each  year 
receives  from  the  preceding  year  about  as  much  as  it  turns 
over  to  the  following  year ;  this  procedure  gives  results  which 
can  be  compared  one  year  with  another.  Abnormal  periods 
alone  vitiate  this  rule.^  Accounting  by  administrative  periods 
also  possesses  advantages  of  its  own  which  are  unknown  to 
the  fiscal  period,  among  which  the  promptness  with  which 
accounts  are  prepared  is  most  striking. 

By  taking  into  account  only  the  simple  and  actual  facts  re- 
lating to  revenues  and  expenditures,*  and  by  posting  these 

1  In  France  the  operations  of  the  second  year  of  the  fiscal  period 
remain  approximately  equal  to  each  other  from  year  to  year.  The 
general  statements  of  finances  make  it  possible  to  ascertain  this: 
the  summary  which  we  give  further  on  shows  that  the  sums  carried 
forward  to  the  second  year  of  the  fiscal  period  always  represent  al- 
most two  and  a  half  per  cent,  of  the  total  of  revenues  and  ten  or 
eleven  per  cent,  of  the  total  of  expenditures. 

2  According  to  "Finance  accounts  for  the  financial  year  1906-1907" 
the  total  of  revenues  carried  forward  to  March  31,  1906,  amounted 
to  123,000,000  francs  and  a  year  later,  on  March  31,  1907,  there  was 
a  slightly  greater  balance  of  127,900,000  francs  to  be  carried  forward 
to  the  following  fiscal  year. 

3  In  1 842- 1 843,  for  instance,  when  the  income-tax  was  reestablished, 
the  long  delays  necessitated  by  the  making  out  of  the  first  lists  caused 
a  loss  of  55,000,000  in  collections  for  this  fiscal  year;  this  amount 
benefited  the  following  year  1843-1844.  The  system  of  accounting  by 
fiscal  period  would  have  attached  this  55,000,000  francs  to  the  fiscal 
period  1842-1843.  Conversely  in  1869,  when  Mr.  Lowe,  Chancellor  of 
the  Exchequer,  changed  the  dates  on  which  the  income-tax  was  due 
by  fixing  one  single  date  for  payment  in  January,  he  exceptionally 
credited  the  year  1869- 1870  with  83,350,000  francs  from  this  revenue, 
while  the  system  of  accounting  by  fiscal  periods  would  have  distrib- 
uted proportionally  these  revenues  between  the  two  interested  years. 
In  case  of  a  system  of  accounting  by  administrative  periods  the  date 
of  the  collection  would  decide  such  a  question. 

*  Some  writers  have  called  the  system  of  accounting  by  administra- 
tive periods  "childish"  because  of  its  great  simplicity.  It  seems,  how- 
ever, that  the  English,  on  the  contrary,  attribute  to  our  fiscal  period 
of  fifteen  or  sixteen  months  "the  uselessly  complicated  character  of  a 
folly." 


THE  BUDGET 


Advantages 
of  Account- 
ing by 
Administra- 
tive Periods 


Italy 
Chooses 
the  System 
Used  in 
England 


entries  from  day  to  day,  the  system  of  accotmting  by  admin- 
istrative periods  is  ready  at  a  moment's  notice  to  strike  off 
its  balance  sheet.  In  England  complete  results  of  the  fiscal 
year  closing  on  the  evening  of  March  31  are  published  on 
April  i.^  The  Bank  of  England,  in  order  to  furnish  the  final 
data,  has  only  to  total  the  debit  and  credit  entries  of  the  Ex- 
chequer. Furthermore,  the  balance  is  published  monthly  in 
the  newspapers.  The  Minister  of  Finance,  therefore,  bases 
his  current  budget,  not  as  in  France  on  figures  which  are  two 
years  old,  but  on  figures  of  the  year  just  ended.  His  state- 
ment submitted  to  the  House  of  Commons,  by  giving  an 
account  of  the  operations  of  the  fiscal  year  just  closed,  insures 
for  his  estimates,  during  the  current  year,  a  solid  foundation. 
The  last  part  of  this  book,  dealing  with  questions  of  control, 
throws  further  light  on  the  merits  of  promptness. 

In  i860  Italy  deemed  it  expedient  to  adopt  the  system  of 
accounting  by  administrative  periods,  when  it  was  free  to 
choose  from  the  various  European  systems  of  accounting. 
Its  accounting  law  of  February  17,  1884,  reads  as  follows: 
"The  fiscal  year  begins  on  July  i  and  ends  June  30,  of  the 
following  year."     (Article  23.) 

"Included  in  the  budget  accounts  are:  (i)  Revenues  as- 
certained and  due  between  July  i  and  June  30;  (2)  expendi- 
tures vouchered  and  liquidated,  and  expenditures  incurred 
during  the  same  period  of  time;  (3)  the  collections  made,  de- 
posits in  the  Treasury  and  payments  made  during  the  afore- 
said period."     (Article  25.) 

We  shall  see  later  in  Chapters  XXVI  and  XXX  how  the 
system,  specified  in  this  article,  works:  Let  us  say  in  this 
connection  that  it  corrects  only  the  excessively  rigorous 
method  of  the  strict  cash  account  ^  by  superimposing  on  it  an 
account  of  ascertained  assets.  The  known  revenues  and  ex- 
penditures, although  not  as  yet  received  or  paid  out,  are 
added  to  the  actual  credit  and  debit  entries  of  the  Treasury 


^  Thus,  the  Chancellor  of  the  Exchequer  was  able  to  publish  in  the 
first  months  of  1912  the  complete  results  of  the  fiscal  year,  1911-1912, 
and  to  comment  on  the  excess  which  resulted  definitely  from  the 
balances  of  the  accounts  on  March  31. 

2  Chapter  XXVI  shows  that  even  in  England  the  fiscal  year  is  pro- 
longed by  means  of  opening  in  the  Bank  a  special  account  in  the 
name  of  the  Paymaster  General.  It  is  impossible,  as  a  matter  of  fact, 
to  stop  the  accounts  of  the  Treasury  abruptly  and  without  any  delay 
on  the  last  day  of  the  year. 


THE  FISCAL  PERIOD 

in  order  to  complete  the  financial  operations  of  the  year. 
This  forms  a  sort  of  "fiscal  period"  of  twelve  months  only, 
without  prolongation,  avoiding  the  objection  of  overlapping, 
which  was  pointed  out  as  existing  in  France.  Mr.  Cerboni, 
Director  General  of  Accounting  in  Italy,  states  very  justly  in 
a  letter  of  June  9,  1888: 

"One  of  the  considerations  which  contributed  most  to- 
ward the  establishing  of  a  fiscal  period  of  twelve  months 
in  Italy  was  the  desire  absolutely  to  deprive  the  executive 
power  of  the  possibility  of  incurring  expenditures  [obliga- 
tions] beyond  the  limits  of  twelve  months.  A  limitation 
of  opportunity  is  obtained,  or,  if  you  wish,  a  limitation  of 
temptation  to  untie  the  purse  strings,  because  it  is  cer- 
tain that  the  longer  a  fiscal  period  lasts,  the  more  the  ad- 
ministrations will  be  urged  to  expend  the  total  of  appro- 
priations allotted  by  the  legislative  powers." 

Not  only  do  two  large  countries,  England  and  Italy,  prac-  The  Method 

tice  the  system  of  accounting  by  annual  administrative  pe-  used"in  ^ 

riods,  but  commerce  knows  no  other  method.    Bankers,  manu-  Private 

facturers,  merchants,  keep  their  books  and  make  out  their  bal-  ^"s^ness 
ance  sheets  annually.     The  system  of  accounting  by  adminis- 
trative periods  is  explicitly  described  by  the  commercial  code, 
which  devotes  Chapter  II  to  "Commercial  Books.'*  ^ 

There  is  no  doubt  that  large  manufacturing  companies,  France 

financial  associations,  for  the  sake  of  clearness  of  their  ac-  Requires 

counts  submitted  to  stockholders,    attach    to   the    year    just  Companies 

closed  certain  operations  liquidated  or  paid  for  subsequently,  to  Adopt 
which  operations  are  an  integral  part  of  that  fiscal  year.^ 

^  The  Commercial  Code  requires  trades  people  to  keep  a  continuous 
system  of  accounting  from  day  to  day  which  can  be  stopped  and  bal- 
anced on  a  moment's  notice  by  annual  inventories,  in  conformity  with 
the  following  provisions :  "Every  tradesman  must  keep  a  ledger  which 
shows,  day  by  day,  his  assets  and  liabilities,  and  in  general,  all  the  en- 
tries regardless  of  whether  they  are  debit  or  credit  entries.  He  must 
make  each  year  an  inventory  of  his  movable  and  immovable  property, 
of  his  current  debts,  etc."  (Articles  8  and  9  of  the  Commercial  Code, 
Chapter  II,  Commercial  Books.) 

2  Thus  the  railroad  companies  attach  the  revenues  and  expenditures 
which  their  treasury  was  not  able  to  register  before  it  closed  on  De- 
cember 31,  to  the  year  to  which  they  actually  belong.  In  the  same 
way  the  banks  calculate  the  discount  of  their  bills  and  acceptances 
on  January  i,  or,  in  other  words,  they  distribute  pro  rata,  according 
to  the  number  of  days  elapsed  and  still  to  elapse,  the  product  of  the 


THE  BUDGET 

But  these  necessary  modifications  do  not  prevent  the  system 
of  accounting  by  administrative  periods  from  being  effective 
and  up-to-date,  since  the  annual  meetings  of  stockholders  can 
have  before  them  in  the  months  of  March  or  April,^  that  is 
to  say,  during  the  first  three  or  four  months  of  the  year,  a 
definite  report  presenting  the  total  of  operations  for  the  pre- 
ceding year  and  suggesting  the  investment  of  profits  made 
during  this  period.^ 

discount  of  securities  which  become  due  after  December  31.  The 
total  of  complementary  operations  of  this  nature  is  currently  called 
"the  thirteenth  month." 

^  The  report  of  the  Bank  of  France  is  submitted,  in  January  of 
each  year,  to  the  stockholders,  together  with  the  determination  of  the 
dividend.     (On  January  30,  1908,  for  the  operations  of  1907.) 

2  [While  Stourm  points  to  the  fact  that  it  is  possible  to  show  con- 
ditions as  they  actually  exist  at  any  time,  and  also  to  give  an  accu- 
rate and  up-to-date  statement  of  operations  for  any  expired  period, 
he  does  not  seem  to  see,  or  at  least  does  not  state  wherein  the  essen- 
tial difference  lies  between  the  French  Government  system  of  ac- 
counting by  "fiscal  periods"  and  the  usual  commercial  practice  of 
accounting  by  "administrative  periods"  or  the  "fiscal  year."  He 
seems  to  leave  out  of  the  picture  the  fact  that  the  commercial  prac- 
tice is  based  on  first  setting  up  "accruals"  and  then  making  entries 
showing  "cash  receipts"  and  "cash  disbursements"  when  revenues  ac- 
crued are  collected  or  liabilities  incurred  are  paid.  Thus,  the  first 
entry  in  the  "assets"  and  "revenue"  accounts  is  "taxes  receivable  (an 
asset  account)  debtor,  to  revenues — taxes"  or  what  not.  Then  when 
taxes  are  collected,  the  entry  shows  only  a  change  in  the  form  of 
asset,  viz. :  "Cash  debtor,  to  taxes  receivable" — the  "revenues- 
taxes"  account  showing  the  income  accrued  stands  as  originally  made. 
So  with  transactions  by  which  liabilities  are  incurred  for  expenses, 
the  entry  would  be  "expenses  debtor  to  accounts  payable."  Then 
when  the  liability  is  paid  "cash"  is  credited  and  the  "accounts  pay- 
able" correspondingly  reduced.  But  the  important  fact  is  that  by 
use  of  this  method  it  is  possible  to  show  "operations"  in  terms  of 
"revenues  and  expenses"  and  present  financial  condition  in  terms  of 
"assets  and  liabilities"  at  the  closing  of  any  day's  business.  Then,- 
if  officers  operate  under  the  limitations  of  "funds"  and  "appropria- 
tions," collateral  entries  may  be  used  to  show  the  "funds"  and  "appro- 
priations" affected,  so  that  their  condition  may  be  just  as  promptly 
shown.  The  whole  practice  of  accounting  by  "fiscal  periods,"  as  de- 
veloped in  France,  has"  grown  out  of  a  method  which  does  not  admit 
of  recording  the  initial  steps  in  transactions  as  they  occur.  There- 
fore, they  must  wait  till  each  transaction  is  consummated  before  stat- 
ing the  account. — The  Editor.] 


138 


THE  FISCAL  PERIOD 


MixpD  Reform  Recommended  by  Baron  Louis  in  1819 

While  emphasizing  the  merits  of  accounting  by  adminis- 
trative periods,  we  would  not  dare  to  plead  for  its  immediate 
introduction  in  France,  as  this  would  mean  too  abrupt  a 
change.  It  is  also  possible  that  our  parliamentary  morals,  less 
strict  than  those  of  our  neighbors,  would  overcome  with  dif- 
ficulty the  ternptations  obviously  offered  at  the  end  of  the 
year  of  carrying  forward  items  of  expenditure  and  fraudu- 
lently anticipating  revenues.  On  the  other  hand,  it  is  im- 
possible— from  the  point  of  view  of  methodical  grouping  of 
annual  revenues  and  expenditures  and  from  the  point  of  view 
of  the  synthesis  of  the  operations  for  each  period — to  over- 
look the  superiority  of  accounting  by  fiscal  periods.^ 

The  main  objection  to  accounting  by  fiscal  periods  lies  in 
the  delay  to  which  the  accounts  are  subjected.  If  it  were  pos- 
sible to  shorten  or  to  avoid  this,  only  the  advantages  of  the 
system  would  remain.  The  duration  of  the  fiscal  period  has 
already  been  shortened  by  bringing  up  the  date  of  its  closing, 
as  will  be  shown  in  Chapter  XXVI.  This,  however,  is  not 
enough. 

In  1 8 19  Baron  Louis  outlined  the  program  of  a  mixed  pro- 
cedure and'this  program  might  easily  be  revived.^    This  pro- 

^  [The  foregoing  seems  further  to  indicate  failure  to  grasp  the 
essentials  as  set  forth  in  the  previous  footnote.  A  system  of  ac- 
counts which  shows  both  "assets  and  liabilities"  and  "operations," 
and  where  funds  and  appropriations  also  are  used,  the  transactions 
affecting  them  and  the  condition  of  each  is  the  best  possible  protection 
against  the  dangers  which  the  author  foresees.  This  provides  for 
giving  all  the  information  and  protection  that  is  obtained  after  wait- 
ing months  or  years  under  the  French  system,  and,  at  the  same  time, 
gives  to  the  Executive  and  the  representative  body  up-to-date  infor- 
mation as  a  basis  for  judgment  concerning  matters  of  policy,  and  as 
a  means  of  detecting  and  preventing  misadministration. — The  Edi- 
tor.] 

2  Baron  Louis,  in  spite  of  his  denials,  was  a  supporter  of  the  sub- 
stitution of  the  system  of  accounting  by  administrative  periods  for 
the  system  of  accounting  by  fiscal  periods.  This  is  expressly  indicated 
by  the  following :  "The  accounts  intended  for  the  Chambers  and  for 
the  public  would  have  less  appearance  of  being  complicated  'if  they 
reduced  themselves  to  one  account'  which  would  make  the  end  of  the 
year  just  expired  coincide  with  the  closing  date  of  the  budget  for  this 
year.  Thus  the  account  for  one  year  would  no  longer  be  a  mixed 
account  by  administrative  periods  and  by  fiscal  periods,  composed  of 
fragments  which  must  be  collected  subsequently  in  order  to  put  to- 
gether the  statement  of  budgets  to  which  they  respectively  belonged," 


THE  BUDGET 


Character 
of  Reform 
Proposed 


posal,  quite  similar  to  that  adopted  by  Italy,  would  consist  of 
the  following:  The  moment  the  year  is  finished,  the  debit 
and  credit  entries  of  the  public  treasuries  could  be  totaled  and 
published,  this  forming  a  first  return  of  immediate  and  posi- 
tive statistical  data,  containing  the  majority  of  the  operations 
carried  out  during  the  fiscal  period  and  representing  on  the 
average  85  per  cent,  of  the  expenditures  and  97  per  cent,  of 
the  revenues.^     The  surplus  would  be  estimated  as  "assets 


(Statement  relating  to  a  definite  regulation  of  the  budgets  from  1815 
to  1818  by  Baron  Louis,  Minister  of  Finance,  February  15,  1819.) 

Later,  under  the  influence  of  violent  attacks  which  were  caused  by 
this  preference  of  his,  Baron  Louis  extenuated  his  first  ideas  by  sug- 
gesting a  combination  of  the  system  of  accounting  by  administrative 
periods  with  a  system  of  accounting  by  fiscal  periods.  His  plan  con- 
sisted of  submitting  immediately  to  the  Chambers  an  account  by  ad- 
ministrative periods  which  could  easily  be  prepared  without  delay  and 
which  could  serve  as  a  temporary  basis  for  the  establishing  of  the 
future  budget.  Then,  as  soon  as  all  the  necessary  elements  could  be 
collected,  the  complete  and  detailed  account  for  the  fiscal  period,  such 
as  is  done  at  the  present  time,  would  be  published. 

"The  systems  of  accounting  by  administrative  periods  and  fiscal 
periods,"  he  said,  "were  the  object  of  discussions  in  which,  however, 
a  compromise  might  easily  be  reached;  it  is  impossible  to  give  definite 
preference  to  one  system  over  the  other.  Both  systems  are  necessary 
and  each  has  its  own  purpose."  (Plan  relating  to  regulation  of  budg- 
ets for  1815,  1816  and  1817  by  Baron  Louis,  Minister  of  Finance, 
June  4,  1819.)  "Accounting  by  fiscal  periods,"  he  says  in  another 
place,  "has  the  object  of  presenting  all  the  known  facts  relating  to 
revenues  and  expenditures,  cojnparing  them  with  their  estimates  in 
the  budget.  This  account,  however,  although  very  useful  and  quite 
sufficient  for  purposes  of  illustrating  the  course  of  the  administra- 
tion and  determinmg  its  deliberations,  does  not  possess  rigorous  exact- 
ness. The  nature  of  things  is  opposed  to  it  and  for  this  reason  we 
have  in  181 7  introduced  in  our  finances  the  system  of  accounting  by 
Administrative  periods.  This  account  contains  all  the  facts  relating  to 
revenues  and  expenditures  collected  and  made  between  two  fixed 
dates.  This  account  makes  the  balances  and  shows  them:  the  con- 
formity of  these  balances  with  the  cash  on  hand  and  in  securities, 
does  not  admit  of  doubt  as  to  the  reality  of  the  operations  which  the 
account  in  question  described.  Thus  this  account  possesses  an  amount 
of  certitude  on  which  the  public  can  depend.  .  .  .  This  is  not  the  case 
with  accounts  by  fiscal  periods  ...  the  account  by  administrative 
periods  should,  therefore,  support  the  account  by  fiscal  periods 
and  make  the  latter  distinct."  (Speech  of  Baron  Louis,  May  29, 
1819.) 

^  The  report  of  the  legislative  commission  in  charge  of  examining 
the  plan  of  M.  George  Cochery  of  March  26,  1887,  relating  to  the  re- 
duction of  the  duration  of  the  fiscal  period,  reproduces  the  following 
statistical  data  quoted  from  the  general  accounts  of  finances: 

140 


THE  FISCAL  PERIOD 

ascertained"  (droits  constates)  to  be  charged  against  or  cred- 
ited to  the  Treasury.  It  is  important  to  state  in  this  connec- 
tion that  the  general  account  of  finances  works  in  the  same 
way,  in  order  to  prepare  the  account  of  the  last  fiscal  period. 
For  instance,  the  general  account  published  at  the  beginning 
of  191 3  ofificially  states  the  situation  of  the  fiscal  period  191 2 
by  adding  to  the  actual  collections  and  payments  stopped  on 
December  31,  191 2,  the  balances  to  be  collected  and  paid, 
existing  at  that  date.  Thus,  the  summary  of  the  fiscal  period 
for  19 12  shows  a  sufificient,  if  not  definite,  exactness.  The 
reason  it  is  not  definite  is  this,  that  the  droits  constates  of 
revenues  and  expenditures  do  not  always  transform  them- 
selves, as  to  totals,  into  actual  collections  and  payments. 

The  Italian  system  of  accounting  opens  a  special  account 
for  balances,  in  order  to  follow  in  a  precise  manner  the  des- 
tinies of  these  ''ascertained  assets."  ^  Would  it  be  proper  to 
imitate  Italy  and  to  import  into  our  country  these  accounts  of 
balances  which  seem  open  to  some  criticism?  Or  would  it 
be  preferable,  from  the  point  of  view  of  definite  auditing  of 
the  fiscal  period,  to  stick  to  our  custom,  except  for  the  inno- 
vation relating  to  the  immediate  publication  of  a  statement  of 
operations  and  results  of  the  fiscal  period  just  expired,  as 
exhibited  in  the  first  return?  This  preliminary  report  on 
the  expired  fiscal  period — prepared  by  the  Minister  of  Fi- 
nance and  accompanied  by  his  comments  as  well  as  those  of 
disbursing  ministers — if  published  in  the  first  days  of  Janu- 
ary (before  the  general  accounts  of  finances,  in  which  it  is 
submerged,  is  published  in  a  1,000-page  volume)  would  con- 
stitute a  balance  sheet  [statement  of  revenues  and  expendi- 


Years 
1883 
1884 
1885 

Revenues 

First  year  of       Second  year  of 
the  fiscal  period      the  fiscal  period 
Francs                    Francs 
2,968,000,000              70,000,000 
2,954,000,000              78,000,000 
2,920,000,000              8 1 ,000,000 

Proportion  of  Opi^ 
erations  during 
the  second  year 

2.30  per  cent 

2.50  "   " 
2.69  "   " 

Expenditures 

1883  2,759,000,000  341,000,000  II         «      « 

1884  2,773,000,000  348,000,000  II         "      " 

1885  2,864,000,000  361,000,000  II         "      " 
The  general  accounts  for  1906  and  1907  more  or  less  confirm  these 

ratios. 
^  See  Chapter  XXVI,  5. 

141 


THE  BUDGET 

tures]  for  the  fiscal  period  just  closed.  It  would  be  a  balance 
sheet  made  out  under  conditions  warranting  a  sufficient  exact- 
ness and  capable,  as  has  been  said,  of  satisfying  public  opinion 
and  serving  as  a  guide  to  any  legislator  having  in  charge  the 
preparation  of  future  budgets.  The  particular  merit  of  such 
a  report  would  be  its  timeliness. 

It  would  possess  another  not  less  important  merit — it 
would  prevent  in  large  measure  the  possibility  of  abuses  re- 
sulting from  the  overlapping  of  fiscal  periods,  of  which  we 
have  spoken  above.  A  table,  showing  the  balances  to  be  paid 
on  December  31,  if  closed  on  that  date  under  the  inspection 
of  comptrollers  of  incurred  expenditures  and  published  imme- 
diately, would  not  permit  the  disbursing  ministers  to  modify 
the  official  results  by  subsequent  manipulations. 

But  do  we  not  satisfy  ourselves  with  temporary  arrange- 
ments when  definite  things  are  slow  in  materializing?  Are 
not  the  figures  of  tax  collectors  published  every  month  in  the 
Journal  OiUcicl  as  they  are  hurriedly  transmitted  by  telegraph 
to  the  Minister?  Are  not  the  statements  of  the  customs  ad- 
ministration— relating  to  imports  and  exports,  which  com- 
merce needs  without  delay — ^given  out  in  monthly  series  and 
published  "subject  to  correction  "  ^  only  to  be  included  later 
in  columns  of  figures  of  a  large  yellow  volume,  verified  and 
corrected,  over  which  conscientious  statisticians  grow  gray? 

In  the  same  way,  the  cash  balance  sheet  made  out  in  Janu- 
ary and  covering  the  year  just  expired  (if  completed  by  sup- 
plementary estimates  of  operations  undertaken,  but  the  trans- 
actions pertaining  to  which  are  still  unliquidated,  could  well 
await  the  publication  of  a  definite  account  for  the  fiscal  year, 
which  account  could  thus  be  minutely  prepared  and  exact  to 
the  penny.^ 

In  any  case,  unless  we  radically  change  our  system  and 
frankly  adopt  that  of  accounting  by  administrative  periods, 
which  may  possibly  turn  out  to  be  the  necessary  solution,  there 
is  no  way  to  escape  excessive  delays  and  the  abuses  involved 

^  In  the  same  way  statistics  of  the  production  of  coal  mines,  iron 
foundries,  steel  and  iron  mills,  cereals,  wines,  etc.,  are  published  in 
the  Journal  Officiel  with  their  temporary  figures,  as  soon  as  the  first 
facts  are  sufficiently  known. 

2  We  shall  see  in  Chapter  XXIX  that  the  Cour  des  Comptes  of 
Italy  proceeds  in  the  same  way.  In  order  to  control  the  operations 
carried  out  by  the  ministries  more  quickly,  this  Cour  des  Comptes 
does  not  hesitate  to  pass  its  opinion  on  temporary  results,  the  authen- 
ticity of  which  it  deems  sufficient. 

142 


THE  FISCAL  PERIOD 

in  the  system  of  accounting  by  fiscal  periods.  The  advancing 
of  the  closing  date  of  fiscal  periods  by  several  months,  as  con- 
templated by  the  law  of  1889,  of  which  we  shall  speak,  did 
not  succeed  in  remedying  the  condition.  In  default  of  having 
a  procedure  authorizing  preliminary  reports,  of  which  we 
have  spoken  above,  it  would  be  better  to  resolve  to  follow 
the  example  of  England  and  of  Italy,  by  introducing  in 
France  the  system  of  accounting  by  administrative  periods.^ 

^  M.  Leon  Say,  in  his  great  speech  on  the  budget  of  1891,  after 
having  replied  that  "the  fiscal  periods  succeeded  one  another  so 
rapidly  that  they  were  never  liquidated/'  did  not  conceal  his  prefer- 
ence for  accounting  by  administrative  periods.  "There  is  here  a  con- 
siderable reform,  difficult  to  realize;  to  profit  by  it,  it  must  be  begun." 
(Oct.  2,  1890.) 


143 


CHAPTER  VI 
UNIVERSALITY  AND  SPECIALIZATION 

[The  Principles  of  Comprehensiveness  of  Budget  Plan 

as  against  the  special  funding  of 

Different  Activities] 

General  Considerations :  Qualities  Which  a  Budget  Should  Possess ; 
Simplification  of  Terms. 

The  Rule  of  Universality  [Comprehensiveness  of  Plan]  as  It  Has 
Developed  in  France:  Definition  of  "Universality";  Efforts  Made 
to  Break  the  Rule;  Struggles  of  Officers  to  Free  Themselves  from 
Budget  Control;  Under  the  Old  Regime;  Items  Omitted;  After  the 
Revolution;  Under  the  Consulate  and  Empire;  The  Royal  Ordi- 
nance of  1817;  120,000,000  Expenditures  Brought  into  Budget  by 
Rule;  The  Rule  of  Comprehensiveness  as  Set  Forth  by  the  Ordi- 
nance of  1822;  Application  of  Same  Rule  to  Revenues  from  Ex- 
penditures; Extension  of  Principle  to  Sales;  Should  Not  Be  Car- 
ried to  Extreme;  Efforts  to  Break  Down  the  Rule;  Examples  of 
Attempted  Use  of  Properties  and  Proceeds  Without  Authority; 
Where  the  Use  of  Net  Figures  Is  Justified ;  In  General  the  Princi- 
ple Should  Be  Adhered  to. 

The  Principle  of  Universality  as  Applied  to  the  Budgets  of  Coun- 
tries Other  Than  France:  The  English  Practice;  The  Practice  in 
Germany;  The  Practice  in  Prussia;  The  Practice  in  Austria;  Ital- 
ian Practice;  Russian  Practice;  Belgium  Displays  "Gross" 
Amounts. 

The  Merits  of  the  Principle  of  Universality:  Favorable  to 
Economy;  Makes  for  Clearness  of  Statement;  Operates  to  Produce 
Unity  of  Budget  Plan. 

The  Rule  of  Specialization  [Special  Funding]  Opposed  to  the  Rule  of 
Universality:  Operates  Against  the  Principle  of  Unity;  Prevents 
Comprehensiveness  of  Budget  Statement;  Knowledge  of  Special 
Undertakings  Should  Come  Through  Special  Reports. 

General  Considerations 

How  IS  the  budget  prepared?  Or,  better  still,  let  us  sub- 
divide the  question:  How  should  the  budget  be  prepared? 
How  is  the  iDudget  actually  prepared  by  various  governments? 

Let  us  first  take  up  the  theory  and  then  its  application. 

144 


UNIVERSALITY  AND  SPECIALIZATION 

Qualities  Which  a  Budget  Should  Possess:  The  qualities 
which  a  budget  should  possess  cannot  possibly  be  enumerated : 
frankness,  clearness,  unity,  economy,  equilibrium,  etc. — the 
list  would  be  almost  interminable.^ 

SimpMcation  of  Terms:  It  is  necessary,  therefore,  to 
dwell  only  on  the  more  essential  of  these  qualities.  In  our 
opinion,  two  of  them  contain  all  the  others : 

I.  The  budgets  must  describe  in  extenso  all  the  operations 
relating  to  revenues  and  expenditures,  clearly  and 
frankly. 

1  M.  Leon  Say,  in  his  lecture  at  the  Ecole  des  Sciences  Politiqucs 
in  1884-1885,  designated  the  following  four  quaHties  as  the  essential 
qualities  of  a  budget:  i.  the  budget  must  have  umty;  2.  the  budget 
must  be  annual ;  3.  the  budget  must  be  made  inadvance ;  4.  the  budget 
must  represent  an  accounting  personality. 

The  unity  of  the  budget,  with  which  we  are  going  to  deal  in  this 
chapter,  tends  to  include  in  one  single  total  all  the  revenues  on  one 
side  and  all  the  expenditures  on  the  other:  "It  is  necessary,"  says 
M.  Say,  "to  enclose  a  budget  in  a  monument,  the  arrangement  of 
which  can  easily  be  discerned  and  the  outlines  of  which  are  apparent 
at  a  glance.    Hence,  the  principle  of  unity." 

The  budget  must  be  annual,  in  the  sense  that  the  legislative  authori- 
zation for  levying  taxes  and  disbursing  expenditures  cannot  go  on 
indefinitely.  "It  is  necessary  that  the  contract  be  limited  in  its  dura- 
tion." 

The  budget,  furthermore,  must  be  made  in  advance.  This  means 
that  no  operation  relating  to  either  the  revenues  or  the  expenditures 
shall  precede  the  authorization  granted  by  the  representatives  of  the 
nation.  "The  legislature  would  become  responsible  if  the  budget  were 
set  in  operation  prior  to  the  legislatures  granting  the  right.  ...  It 
would  be  more  convenient  not  to  keep  books  at  all;  the  most  simple 
budget  of  revenues  has  always  been  that  of  'the  Wandering  Jew.' 
To  have  a  fund,  say,  of  five  sous,  which  is  renewed  constantly,  would 
be  the  most  convenient  thing.  Unfortunately,  however,  this  is  not 
the  way  things  are  run." 

Finally,  the  budget  must  be  an  accounting  personality,  that  is,  a 
rational  being  with  assets  and  liabilities:  "The  budget  is  voted  as 
a  birth  certificate  of  a  person  whose  destiny  it  is  to  move  around  dur- 
ing an  entire  year."     {Revue  des  Deux  Mondes,  January  15,  1885.) 

This  scientific  description  of  the  qualities  essential  to  a  budget  is 
necessary  in  this  connection,  because  the  exigencies  of  our  work  com- 
pel us  to  single  out  its  elements.  In  this  chapter  we  shall  speak  about 
the  unity.  In  the  preceding  chapter,  relating  to  the  fiscal  period,  we 
have  spoken  about  the  accounting  personality  of  the  budget.  In  fol- 
lowing chapters  we  shall  speak  about  the  preliminary  and  annual 
voting  of  the  budget. 

I4S 


THE  BUDGET 


2. 


The  budgets  must  estimate  revenues  and  expenditures 
as  exactly  [reliably]  as  possible.  The  first  of  the  two 
rules  is  called  universality  [comprehensiveness] ;  the 
second  one  accuracy  [reliability].  These  two  rules 
appear  to  include  all  the  others.  If  a  budget  shall  fur- 
nish a  universal  [comprehensive]  list  of  revenues  and 
expenditures  for  the  coming  fiscal  period,  and,  if  it 
shall  add  to  every  item  of  this  list  an  estimate,  as 
exact  [reliable]  as  possible,  such  a  budget  would  seem 
to  fulfill  its  function  to  the  fullest  extent.  From  the 
point  of  view  of  the  mechanics  of  the  budget,  nothing 
more  could  be  demanded  of  those  who  prepared  it.^ 
Even  this  is  demanding  more  than  we  generally  rea- 
lize, and  this  contention  we  shall  prove  later  on. 


Definition 
of  "Uni- 
versality," 
(Compre- 
hensiveness 
of  Plan) 


Struggles 
of   Officers 
to    Free 
Themselves 
from      Bud- 
get  Control 


The    Rule    of    Universality    [Comprehensiveness    of 
Plan]  as  it  Has  Developed  in  France 

Since  "all  public  revenues  and  all  public  expenditures,  with- 
out exception,  must  be  sanctioned  by  the  representatives  of 
the  country,'Mt  is  necessary  that  each  item  of  the  revenues 
and  of  the  expenditures  included  in  the  budget  be  given  this 
necessary  sanction.  The  principle  of  universality  is  the  direct 
result  of  the  [political]  ideas  to  which  the  introduction  of 
this  book  was  devoted. 

Universality  can,  therefore,  be  defined  as  follows:  univer- 
sality means  budgetary  entries  of  all  expenditures  on  the  one 
hand  and  of  all  revenues  on  the  other,  each  in  a  distinct  list. 

Efforts  Made  to  Break  the  Rule:  This  principle  would 
appear  to  have  been  sufficiently  demonstrated  by  the  laws 
proper  of  the  constitutional  regime,  if  it  had  not  been  for 
temptations  to  violate  it,  which  temptations  have  in  practice 
brought  alx)ut  a  series  of  complicated  protective  formalities 
[procedures].  As  a  matter  of  fact,  no  one  likes  to  see  the 
revenues  intended  to  benefit  him  submerged  in  the  mass  of 
other  revenues.  On  the  contrary,  everyone  tries  to  secure  for . 
himself  some  personal  independent  resource  to  form  a  certain 
small  reserve  for  his  own  use.     From  this  disposition  have 

1  There  is  no  doubt  that  the  spirit  of  order  and  economy,  desire 
for  reform,  etc.,  may  inspire  the  framers  of  the  budget  more  or  less 
favorably.  These,  however,  are  moral  and  personal  qualifications, 
and  not  technical  qualifications  inherent  in  the  mechanism  of  the 
budget  plan. 

146 


UNIVERSALITY  AND  SPECIALIZATION 

come  the  eternal  attempts  on  the  part  of  administrators  and 
governments  to  emancipate  themselves  from  the  rule  of  uni- 
versality [comprehensiveness  of  budget  plan].  We  shall  be- 
gin by  considering  the  attempts  directed  against  this  rule  in 
the  past.  Later,  we  shall  see  to  what  encroachments  this 
rule  is  now  exposed,  and  what  obstacles  the  regulations  oppose 
to  them. 

LTnder  the  old  regime  it  can  hardly  be  said  that  budget  Under   the 
rules  were  violated,  because,  as  a  matter  of  fact,  there  were  Regime 

no  budget  rules  in  existence.  If  we  consult  the  most  cele- 
brated budgetary  document  and  the  one  which  is  relatively 
the  most  perfect  in  that  period  (viz. :  the  statement  submitted 
to  the  king  by  Necker,  in  January,  1781),  we  shall  find  in  this 
budget  that  the  expenditures  are  estimated  at  253,954,000 
livres,  while  the  real  total  of  expenditures  exceeded  520,000,- 
000.^  Large  sums  were  concealed  or  suppressed,  either 
through  contraction  or  confusion. 

Thus,  the  fermes  generates  deducted,  without  opposition,  Jjems 
from  their  collections,  the  total  of  salaries  paid  to  the  Parle-  ™*"* 
ment  of  Paris,  to  the  Cour  des  Aides,  to  the  Chambre  des 
Comptes,  also  a  part  of  the  perpetual  and  life  annuities 
charged  against  the  town  hall  and  the  reimbursements  to  the 
clergy,  etc. — amounting  in  total  to  77,573,ooo  livres.  From 
the  gross  sum  of  126,100,000  livres,  which  these  fermes 
generates  collected,  they  turned  over  to  the  Treasury  only 
48,427,000  livres  net;  77,573,000  Hvres  of  expenditures  paid 
directly  remained  invisible.  The  same  was  the  case  with  the 
proceeds  of  general  excise,  of  the  administration  of  domains 
and  with  the  collections  made  by  receivers  general.^     In  ac- 

1  The  account  submitted  by  Necker  ended  in  the  following  figures : 
revenues,  264,154,000  livres;  expenditures,  253,954,000  livres;  excess 
of  revenues,  10,200,000  livres. 

2  Taxes  and  duties  collected  by  receivers  general. 

(Villain-tax,  capitation-tax,  twentieth -tax)         148,590,000  livres 
Assigned  charges  29,050,000 

Turned  over  to  the  Royal  Treasury  119,540,000 

The  rough  proceeds  of  the  general  excise  adminis- 
tration 42,000,000      *' 

Assigned  charges  33,100,000 

Balance  turned  over  to  the  Royal  Treasury  8,900,000     " 

This  procedure,  carried  to  extreme,  would  have  finally  offset  all 
the  revenues  by  all  the  expenditures,  which  would  have  reduced  the 
figure  to  be  entered  in  the  budget  to  zero,  or  even  to  less  than  zero, 
because  in  the  end  a  deficit  would  have  manifested  itself. 

147 


THE  BUDGET 


After  the 
Revolution 


Under  thr 
Consulate 
and  Empire 


cordance  with  this  procedure — from  which  Necker,  like  his 
predecessors,  was  unable  to  emancipate  himself— 250,000,000 
of  expenditures  from  a  total  sum  of  about  520,000,000  in 
time  disappeared  from  the  accounts.  Almost  half  of  the 
budget  was,  so  to  speak,  annulled  by  compensations.^ 

All  the  financial  tables  of  the  old  regime  are  vitiated  by 
the  same  element  of  exclusion,  though  most  writers  accept 
them  when  they  cite  Forbonnais,  Mallet  or  Mathon  de  la 
Cour.2 

Under  the  Constitutional  Assembly,  the  principle  of  com- 
prehensiveness seemed  to  come  into  its  rights;  revenues  and 
expenditures  were  counted  by  their  gross  totals.  The  budgets 
of  this  period,  however,  including  the  budgets  of  the  Direc- 
tory, had  too  little  authority  ^  to  be  quoted  as  models.  We 
arrive  thus  immediately  at  the  beginning  of  the  nineteenth 
century. 

The  budgets  of  the  Consulate  and  of  the  Empire,  in  spite 
of  many  gaps  and  deficiencies,  had  the  merit  of  regularly  de- 
veloping their  revenues  and  their  Expenditures  in  extenso, 
no  longer  practicing  the  system  of  "contractions"  which  ex- 
isted under  the  old  regime ;  the  system  of  "contractions"  con- 
tinued to  aflfect  only  the  expenditures  for  collecting  the  reve- 
nues; this  abuse  became  rooted  in  this  particular  part  of  the 
budget  and  it  was  a  hard  task  to  dislodge  it.* 

Until  the  time  of  the  Restoration,  the  net  proceeds  of  taxes 
only  appeared  under  the  heading  of  revenues,  the  costs  of 
collection  having  been  either  deducted  or  ignored.  Each 
administration  deducted  the  total  of  the  costs  from  its  reve- 
nues without  accounting  for  these  costs ;  legislative  documents 
referred  only  to  net  amounts  put  at  the  disposal  of  the  Treas- 
ury.    It  is  necessary,  therefore,  to  begin  by  increasing  the 


^  When  Necker,  however,  published  his  famous  account,  everybody 
exclaimed :  "The  veil  which  has  hitherto  concealed  the  true  state  of 
finances  to  the  eyes  of  the  country  has  been  torn  aside." 

The  enthusiasm  and  the  applause  were  universal.  The  public  in 
those  days  was  satisfied  with  little,  because  it  might  be  doubted 
whether  those  who  applauded  with  so  much  noise  really  saw  so  clearly 
when  light  was  shed  upon  the  financial  situation. 

2  The  last  account  of  the  old  regime  submitted  by  Lomenie  de 
Brienne  in  March,  1788,  further  aggravated  the  system  of  compensa- 
tions or  contractions  of  revenues  and  expenditures. 

^  See  our  history  of  Finances  de  I'ancien  regime  et  de  la  Revolution, 
with  regard  to  the  budgets  of  the  Revolution. 

*  See  Lcs  Finances  du  Consulat. 


148 


UNIVERSALITY  AND  SPECIALIZATION 

budgets  of  these  periods  by  80,100,  or  120,000,000,  according 
to  the  year,  in  order  to  compare  them  with  present  budgets. 
Napoleon,  however,  while  concealing  from  the  legislative 
body  the  total  of  the  costs  of  tax  collections,  did  not  deprive 
himself  of  this  essential  information.  On  the  morrow  of  his 
coming  into  power,  the  order  of  26th  Prairial  of  the  year  XI 
formally  prohibited  the  accountants  from  making  any  direct 
or  hidden  deductions  from  revenues  for  the  purpose  of  pay- 
ing expenditures.  The  minister,  Barbe-Marbois,  congratu- 
lated himself  on  this  measure  in  the  following  terms: 

"Henceforth,"  he  said,  "all  revenues  shall  be  turned 
over  to  the  Treasury  without  any  deductions,  and  all 
expenditures  will  be  made  from  the  Treasury  through  the 
hands  of  disbursing  agents.  There  is  no  longer  any  rea- 
son for  a  confusion  between  these  two  principal  divisions 
of  our  operations.  All  revenues  shall  be  received  by  one 
kind  of  officer,  while  all  expenditures  shall  be  paid  out  by 
another  kind."  (Report  of  the  Minister  of  the  Treasury, 
to  the  Consuls,  25th  Nivose,  Year  XII.) 

It  would  have  been  surprising  had  the  precision  of  Bona- 
parte's mind  failed  to  organize  for  his  own  benefit  a  clear 
and  methodical  system  of  accounting.  But  it  would  have  been 
still  more  surprising  had  he  submitted  such  system  of  ac- 
counting to  the  scrutiny  of  the  representatives  of  the  country. 

On  the  other  hand,  again,  the  fiscal  administrations  were 
not  inclined  to  give  up  voluntarily  this  prerogative  which 
made  the  fiscal  officers  the  masters  of  their  own  appropria- 
tions.^ Thus,  in  spite  of  the  parliamentary  regime  coming 
into  power,  the  budgets  continued  for  several  years  after  the 
downfall  of  the  Empire  to  conceal  the  costs  of  tax  collecting. 
The  personal  power  of  the  financial  administrations — which 
increased  considerably  with  the  developing  of  the  tax  system 
— aggravated  the  intensity  of  their  resistance.  It  was  hard 
to  break  the  abusive  power  of  these  organized  bodies,  each 
of  which  had  its  own  political  director  general,  assisted  by 
his  own  board,  its  own  central  cashier,  its  own  accounting 

^  It  is  easy  to  imagine  what  struggles  the  old  fiscal  administrations 
had  to  go  through  in  order  to  preserve  this  precious  independence, 
if  we  compare  their  situation  with  that  of  the  present  fiscal  adminis- 
trations, which  are  obliged  to  bargain  for  their  most  indispensable 
appropriations  with  the  commissions  on  budget. 

149 


THE  BUDGET 

division,  its  own  building  and  its  own  bureaus  separated 
from  the  ministry  of  finance.^  Following  the  example  of 
the  old  fermes  generates,^  these  excise  officers  considered 
themselves  as  charged  with  supplying  the  Treasury  of  the  State 
with  funds,  provided  the  necessary  costs  of  collections  were 
deducted  from  the  revenues. 

The  Royal  The  Royal  Ordinance  of  March  26,  18 17,  did  not  hesitate 

^/"iTiT"       ^^  establish  the  following  provision : 

"Henceforth  the  cost  of  excise  offices  shall  be  regu- 
lated  at  the  same  time  and  in  the  same  manner  as  are 
the  other  expenditures  of  the  State.  For  this  purpose, 
the  gross  proceeds  of  taxes  shall  be  entered  as  a  revenue 
in  the  annual  budget  and  the  costs  of  excise  offices  shall 
be  included  in  the  budget  as  an  expenditure/*  (Article  3.) 

The  deputy  reporting  on  the  budget,  in  the  commission  on 
the  budget,  expressed  himself  as  follows: 

"Hitherto  the  budgets  have  presented  only  net  pro- 
ceeds. Would  it  not  be  important  for  you  to  know  the 
nature  and  the  purpose  of  these  deductions  which  reduce 
the  actual  revenues  by  almost  one-third  of  the  total  sum 
of  the  collections  resulting  from  indirect  taxes,  and  by 
one-seventh  of  the  direct  taxes  ?    Should  not  the  expendi- 

1  The  Administration  of  Registration  was  located  in  No.  2,  rue  de 
Choiseul ;  the  Administration  of  Forests  at  No.  23,  rue  Neuve-Saint- 
Augustin;  the  Administration  of  Customs  occupied  the  ancient  palace 
of  the  d'Uzes,  rue  Montmartre;  the  General  Administration  of  In- 
direct Taxes  was  installed  in  the  Marais,  No.  24,  rue  Saint-Avoye  in 
the  ancient  mansion  of  the  Montmorency  and  in  the  mansion 
de  la  Tremoille ;  the  Administration  of  Posts  was  located  in  the  man- 
sion Fleuriau  dArmenonville,  rue  Coq-Heron.  During  this  time 
the  ministry  of  finances  was  located  in  Nos.  40-42,  rue  Neuve-des- 
Petits-Champs,  in  the  mansion  Pontchartrain  on  the  site  since  occu- 
pied by  the  Italian  theater  and  the  Bank  of  France.  The  Royal  Treas- 
ury was  located  at  Nos.  6  and  8  in  the  same  rue  des  Petits-Champs. 

The  ordinance  of  November  4,  1824,  of  M.  De  Villele  united  this 
administration  in  a  large  building  which  Napoleon  started  to  con- 
struct in  the  Rue  de  Rivoli  near  the  Place  de  la  Concorde  in  order 
to  locate  the  post  office  in  this  building.  At  the  same  time  a  uniform 
organization  centralized  in  the  hands  of  the  Minister  of  Finance,  the 
services  of  accounting,  supplies,  pensions  and  treasuries,  which  each 
branch  of  the  service  had  managed  separately. 

2  "All  that  is  necessary  is  to  reestablish  the  ancient  table  of  the 
Conseil  des  fermiers  generaux." 

ISO 


UNIVERSALITY  AND  SPECIALIZATION 

tures  of  revenue  administrations  be  approved  as  well  as 
the  general  expenditures  for  which  you  are  voting  the  ap- 
propriations ?"  (Report  of  Count  Beugnot,  on  ways  and 
means,  March  2^,  1818.) 

As  a  result,  the  gross  proceeds  of  taxes  were  finally  shown  120,000,000 
in  the  budget  of  revenues  and  the  total  of  the  costs  of  their  ^u^g^Broueht 
collection  was  shown  in  the  budget  of  expenditures,  which   into  Budget 
two  budgets  were  included  in  the  fiscal  law  of  May  15,  18 18;  ^y  R"^e 
the  totals  of  this  budget  were  suddenly  increased  byvi20,- 
000,000.^ 

Henceforth,  the  costs  of  collection  were  shown  without 
interruption  in  subsequent  budgets,^  in  conformity  with  the 

^  The  budget  of  the  ministry  of  finance  was  increased  from  27,- 
000,000  in  1817  to  169,000,000  in  1818:  an  increase  of  142,000,000  from 
one  year  to  another.  It  is  necessary,  however,  to  deduct  from  this 
142,000,000  the  different  expenditures  which  were  newly  entered  in 
the  budget  and  are  not  related  to  the  costs  of  tax  collection. 

The  latter  show  approximately  (the  exact  figures  do  not  as  yet 
show  clearly)  the  following  figures: 

Direct  taxes  17,000,000  francs 

Indirect  taxes  104,000,000        " 


Total  121,000,000        " 

These  121,000,000  of  costs,  compared  with  a  total  of  832,000,000  of 
gross  proceeds,  give  for  the  total  a  proportion  of  14  per  cent.,  dis- 
tributed as  follows:  4.60  per  cent,  for  the  direct  taxes  and  22  per 
cent,  for  the  indirect  taxes,  including  the  purchase  of  materials  for 
the  monopolies  of  tobacco  and  of  gunpowder. 

2  Let  us  mention,  however,  a  few  strange  attempts  inspired  un- 
doubtedly by  political  motives  to  return  to  the  old  condition  of  things : 
"Only  net  proceeds  enter  the  Treasury;  the  latter  only  has  charge  of 
and  is  responsible  for  the  net  proceeds.  On  this  form  of  procedure 
were  based  all  our  fiscal  accounts,  going  back  as  far  as  the  account 
submitted  in  171 5  by  Desmarets,  which  was  always  considered  aS  a 
model  of  order  and  clearness.  The  account  published  by  M.  Necker 
in  1 781  and  the  accounts  submitted  by  his  successors  were  invariably 
prepared  in  accordance  with  this  fundamental  rule,  which  seems  to 
be  the  only  one  compatible  with  the  spirit  of  our  institutions  and 
with  the  principles  of  good  accounting.  The  costs  of  the  administra- 
tion, the  waste  and  the  restitutions  can  never  be  included  in  the  fiscal 
law  without  bringing  disorder  and  confusion  into  accounting.  More- 
over, this  system  tends  to  abolish  the  responsibility  of  the  minister 
and  to  turn  over  an  important  portion  of  the  executive  power  into 
the  hands  of  the  legislative  chambers."  This  reactionary  plea  did  not 
essay,  however,  to  draw  its  own  logical  conclusion;  the  individual 
who  rnade  the  above  report  limited  himself  to  expressing  his  hope 
that  his  remarks  would  not  be  made  in  vain  and  that  "they  may  serve 


THE  BUDGET 


The    Rule 
of    Compre- 
hensiveness 
(Universal- 
ity)    as    Set 
Forth   by 
the    Ordi- 
nance of 
1822 


Application 
of  Same 
Rule   to 
Revenues 
Derived 
from  Ex- 
penditures 


following  provisions  of  the  decrees  of  May  31,  1838,  and  of 
the  year  1862,  which  are  still  in  force:  "A  full  receipt  shall 
be  made  for  the  total  of  proceeds.  The  costs  of  collection 
and  administration  as  well  as  other  accessory  costs  shall  be 
carried  as  an  expenditure."     (Article  16.) 

A  short  time  later,  de  Villele  completed  the  aforesaid  meas- 
ure by  the  ordinance  of  September  14,  1822,  the  third  article 
of  which  reads  as  follows:  'The  ministers  shall  not  in- 
crease by  any  particular  resources  the  total  of  appropriations 
allotted  for  the  expenditures  of  their  respective  branches  of 
the  service."  This  article,  which  later  became  article  43  of 
the  Decree  of  May  31,  1862,  introduced  with  regard  to  ex- 
penditures the  same  principle  of  comprehensiveness  which  the 
law  of  1 818  introduced  with  regard  to  revenues. 

Almost  all  the  ministers  become,  through  the  branches  of 
service  of  their  departments,  either  accidentally  or  perma- 
nently, the  beneficiaries  of  certain  revenues  of  which  we  shall 
speak  later.  These  revenues,  although  originating  within 
their  departments  proper,  do  not  belong  to  them.  They  do 
not  have  the  right  to  make  these  receipts  their  own ;  they  must 
turn  them  over  as  an  integral  part  of  the  budget  of  revenues. 
Just  as  the  law  of  18 18  prohibits  the  concealing  of  an  expendi- 
ture behind  a  revenue,  the  ordinance  of  1822  prohibits  the 
screening  of  a  revenue  by  an  expenditure.  On  both  sides 
the  description  must  be  complete;  all  expenditures  shall  be 
entered  on  the  page  which  is  reserved  for  them  and  all  reve- 
nues shall  be  entered  on  the  opposite  page.  Regardless  of  the 
similarity  of  the  origin  and  in  spite  of  their  relationship,  the 
revenues  and  the  expenditures  shall  henceforth  occupy  dis- 
tinctly different  places  in  the  budget:  "The  ministers  shall 
not  increase  by  any  particular  resources  the  total  of  appro- 
priations allotted  for  the  expenditures  of  their  respective 
branches  of  the  service." 

Various  subsequent  laws  have  applied  this  principle  of  in- 
clusiveness  or  comprehensiveness  to  such  branches  of  the 
service  as  have  not  hitherto  observed  it — for  instance,  the 
law  of  July  19,  1845,  relating  to  "proceeds  of  the  work  per- 
formed by  prisoners  in  the  central  penitentiaries."  Until 
that  time  the  central  penitentiaries  increased  by  the  total  of 
these  proceeds  the  figure  of  their  appropriations  granted  by 

to  amend  the  fiscal  laws  which  shall  be  prepared  in  the  future."  (Re- 
port of  Marquis  de  Gamier  in  the  name  of  the  Commission  on  Budg- 
ets of  1 82 1,  in  the  Chambre  des  Pairs,  July  28,  182 1.) 


UNIVERSALITY  AND  SPECIALIZATION 

the  legislature  in  the  ministry  of  the  interior,  in  direct  con- 
tradiction of  the  provisions  of  the  ordinance  of  September 
14,  1822.  The  law  of  July  19,  1845,  ruled  that  "beginning 
with  January    i,    1846,   all  the  funds  proceeding   from  the  ^' 

work  performed  by  convicts  and  all  of  the  funds  which  were 
allotted  to  central  penitentiaries  shall  be  turned  over  to  the 
Treasury."  As  a  result  the  budget  has,  from  1846  on,  opened 
an  entry  among  its  varied  revenues  for  the  proceeds  in  ques- 
tion, which  now  amount  to  from  3,000,000  to  4,000,000.^ 
Correlatively,  a  new  entry  among  the  expenditures  recorded 
the  fact  of  payment  to  convicts  of  the  portion  of  the  proceeds 
from  their  work,  which  belonged  to  them  personally.^ 

The  law  of  December  29,  1876,  under  analogous  conditions 
included  among  the  revenues  the  proceeds  of  fees  collected 
by  diplomatic  and  consular  chanceries  of  the  ministry  of  for- 
eign affairs.^  The  law  of  December  28,  1880,  made  the  same 
provisions  with  regard  to  "the  revenues  of  the  French  School 
in  Rome  in  the  budget  of  the  ministry  of  fine  arts."  *  The 
decree  of  December  31,  1881,  ruled,  furthermore,  that  the 
accessory  proceeds  of  the  Treasury  be  entered  separately 
without  any  compensation. 

The  legislature,  since  the  laws  and  ordinances  of  18 18  and  Extension 
1822,  has  made  great  efforts  to  extend  the  principle  of  com-  ^^  Principle 
prehensiveness,  which — except  in  the  few  cases  hereinafter 
mentioned — predominates  if  it  does  not  absolutely  govern 
our  budgets.  We  have,  for  instance,  the  proceeds  from  to- 
bacco, matches  and  gunpowder  integrally  classified  among 
the  revenues  and  their  costs  among  the  expenditures;  the 

^Extract  from  the  budget  of  revenues  for  1908: 
Proceeds  of  labor  of   convicts  in  workhouses   and 

of  military  convicts  373»ooo  francs 

Proceeds  of  central  prisons  and  houses  of  correction  3,737,000 
Proceeds  of  labor  of  convicts  transported  to  Guiana 

and   New   Caledonia  35o»ooo 

2  The  convicts  receive  from  the  proceeds  of  their  work  (weaving, 
carding  of  silk,  shoe-making,  hosiery-making,  spinning,  brush-making, 
etc.)  the  following:  (i)  a  little  money  for  their  daily  use,  with  which 
they  may  purchase  articles  of  food,  tobacco,  etc.,  within  the  prison 
itself;  (2)  a  certain  reserve  which  is  intended  for  their  first  needs 
upon  their  release  from  prison. 

^A  revenue  of  3,205,000  francs  is  entered  among  the  sundry  pro- 
ceeds of  the  budget  of  191 3  as  proceeds  of  consular  and  diplomatic 
chanceries. 

*  The  regular  revenues  of  the  Academic  de  France  at  Rome  amount 
to  372,000  francs.    (Budget  of  1913.) 


THE  BUDGET 

revenues  from  forests — instead  of  benefiting  the  special  ad- 
ministration which  has  charge  of  their  maintenance  and  su- 
pervision— ^are  entered  among  the  mass  of  revenues;  the 
proceeds  resulting  from  the  sale  of  government  publications, 
from  the  business  done  by  the  archives  of  the  Republic  do  not 
benefit  the  interested  branches  which  receive  all  their  appro- 
priations from  the  budget  of  expenditures.  The  administra- 
tions do  not  even  benefit  from  the  proceeds  resulting  from 
the  sale  of  their  discarded  furniture  nor  their  old  papers.^ 
The  total  is  turned  over  to  the  ministry  of  domains,  which 
accounts  for  it  directly  to  the  Treasury. 

The  reason  for  this  rigorous  interpretation  ^  of  the  pro- 

1  The  administration  of  indirect  taxes  in  former  times  saved  the 
parchment  covers  of  its  "bags"  in  order  to  use  them  right  along. 
This  administration,  however,  has  had  to  give  up  this  system  of 
economy,  which  was  contrary  to  the  regulations.  All  bags  are  now 
supplied  with  a  new  cover,  and  the  old  covers  are  sold  by  weight. 

2  The  application  of  the  principle  of  all  inclusiveness,  in  spite  of 
its  rigorousness,  must  avoid  being  extreme.  Thus  in  1818  at  the 
time  of  the  discussion  of  the  law  of  May  16,  a  deputy  demanded  that 
the  amounts  turned  over  by  the  tobacco  dealers  be  shown  in  their 
debit  and  credit  entries.  These  amounts,  said  the  deputy  in  question, 
should  be  entered  as  revenue,  because  they  constitute  a  real  contribu- 
tion paid  by  the  public  as  a  result  of  the  monopoly  of  tobacco.  On 
the  other  hand,  this  amount  should  be  entered  as  expenditures,  be- 
cause they  form  the  salaries  of  the  distributors  of  tobacco.  (Speech 
of  M.  de  Chauvelin,  deputy,  April  23,  1818.)  The  Director  General 
of  Indirect  Taxes,  M.  de  Barante,  objected  that  it  would  not  be 
possible  to  enter  as  a  revenue  something  that  was  not  received,  nor 
to  enter  as  an  expenditure  something  that  has  not  been  actually  dis- 
bursed. The  17,600  distributors  of  tobacco  are  not  officers,  but  are 
rather  "supervised  debtors."  The  amounts  of  money  paid  to  them 
do  not  have  the  character  of  salaries,  but  of  commercial  profits. 
"What  I  have  said,"  he  added,  "does  not  tend  to  refuse  the  necessary 
information.  Everything  shall  be  explained  in  detail  and  submitted 
to  the  Chamber."  As  a  matter  of  fact,  the  definite  account  of  reve- 
nues mentions  now  every  year,  in  form  of  memorandum,  the  amount 
of  money  allotted  to  the  distributors  of  tobacco.  The  budget  itself, 
however,  continues  to  ignore  them  in  its  estimates,  which  are  com- 
posed exclusively  of  the  net  proceeds  of  sales. 

More  recently  the  conclusion  has  been  reached  with  regard  to  the 
costs  of  the  Treasury,  that  it  would  not  be  proper  to  itemize  on  the 
debit  and  credit  side  of  the  budget  the  operations  of  the  Treasury's 
running  accounts  with  its  various  correspondents.  These  operations 
amount  to  30  or  40  billions  in  receipts  and  to  30  or  40  billions  in 
disbursements.  Pushing  the  compliance  with  article  43  of  the  de- 
cree of  May  31,  1862,  to  the  extreme,  would  result  in  an  absurdity. 
In  this  connection  a  net  balance  either  on  the  debit  or  on  the  credit 
side  is  sufficient. 

IS4 


UNIVERSALITY  AND  SPECIALIZATION 

visions  of   1817  and   1822  can  be  better  understood  if  one   Should  Not 
considers  that  the  administrations  would  like  nothing:  better  ^^S^"!^^ 

1  111  rr  •  •         1        1     •  °  .  ,      to  Jsxtreme 

than  to  be  able  to  oitset  surreptitiously  their  revenues  with 
their  expenditures,  because  the  temptation  to  get  hold  of  fe- 
sources-  originated  within  themselves,  is  still  very  strong 
among  them.  They  would  be  glad  to  assert  the  right  of  de- 
ducting their  expenditures  from  their  revenues.  Many  ex- 
ceptions, which  we  shall  enumerate  later,  have  been  author- 
ized. It  is  necessary,  therefore,  that  the  remaining  rules  be 
strictly  observed  and  that  constant  control  enforce  respect  for 
these  rules.  Let  us  speak  now  about  this  control,  which  tends 
to  compel  the  budgetary  services  to  turn  over  those  funds 
which  they  fail  to  surrender  voluntarily.  The  annual  reports 
of  the  Cour  des  Comptes  furnish  instructive  examples. 

On  the  subject  of  control,  among  infractions  which  were 
denounced  most  frequently — one  of  the  greatest  at  least  in 
former  times — consisted  in  selling  the  old  materials  of 
arsenals,  factories  and  workshops  of  Army  and  Navy  for 
their  own  benefit.  These  establishments  are,  in  fact,  periodi- 
cally encumbered  with  considerable  quantities  of  useless  ma- 
terials, copper  scrap,  iron  scrap,  broken  instruments,  discarded 
utensils  and  waste  of  all  kinds,  which  they  must  get  rid  of, 
and  which  represent  considerable  value;  these  establishments 
must  turn  such  articles  over  to  the  administration  of  do- 
mains, which  sells  them  for  the  benefit  of  the  budget  of  reve- 
nues ;  this  is  the  only  proper  procedure.^    The  workshops  and 

Certain  revenues,  however,  for  a  long  time  used  to  offset  the 
interest  on  the  floating  debt,  such  as  the  profits  of  funds  carried  for- 
ward, interest  paid  by  the  borrowers  from  the  treasury  of  neighbor- 
hood roads  and  instruction  establishments  (see  the  discussion  in  the 
Chamber  of  Deputies  on  December  18,  1884)  and  other  profits,  are 
now  shown  in  the  chapter  devoted  to  revenues  by  order. 

^  "An  arsenal  needs  100,000  kilograms  of  steel  and  has  in  its  stores 
200,000  kilograms  of  old  iron;  nothing  seems  to  be  simpler  than  to 
say  to  the  founder :  Take  my  old  iron,  I  will  take  your  steel  and  shall 
pay  you  the  difference  in  price.  This  is  all  right,  but  how  to  control 
the  officer  who  has  charge  of  this  direct  transaction?  He  could 
make  an  agreement  with  the  founder  and  defraud  the  State.  The 
State  does  not  want  to  be  cheated ;  on  the  other  hand,  the  officer  does 
not  want  to  be  suspected.  Therefore,  underhand  transactions  are 
avoided  and  public  sale  at  auction  takes  their  place;  this  public  sale 
at  auction  entirely  covers  the  responsibility  of  the  officers.  There  is 
a  possibility  of  losing  15,000  or  20,000  francs  through  misstatement, 
millions  of  francs  are  lost  in  auctions,  but  the  administrative  princi- 
ples are  safeguarded."  (Series  of  articles  on  the  Navy,  published  by 
the  daily,  Le  Temps,  signed  by  M.  Paul  Bourde,  1888-1889.) 


Efforts    to 
Break 
Down   the 
Rule 


Examples 
of  At- 
tempted 
Use  of 
Properties 
and   Pro- 
ceeds 
Without 
Authority 


THE  BUDGET 

arsenals,  however,  which  do  not  benefit  by  such  a  procedure, 
invent  all  sorts  of  subterfuges  in  order  to  avoid  such  dispos- 
session. In  most  cases  they  themselves  sell  the  old  materials 
secretly;  or,  after  transforming  them,  use  them  again,^  or 
they  include  them  secretly  in  the  contract  with  a  contractor 
who  deducts  their  price  from  the  bill,  etc.^  In  times  gone 
by,  as  we  have  said,  the  reports  of  the  Cour  des  Comptes  con- 
tained numerous  discoveries  of  fraudulent  practices.  Has 
this  abuse,  manifesting  itself  less  frequently  of  late,  ceased 
to  be  practiced?  Or,  have  better  precautions  been  taken  to 
conceal  it?  The  following  are  examples,  some  of  which  are 
relatively  recent;  these  examples  are  taken  from  annual  re- 
ports submitted  by  the  Cour  des  Comptes  to  the  President 
of  the  Republic.  The  Minister  of  the  Navy,  when  requested 
in  1876  to  contribute  toward  the  expenditures  of  erecting  a 
monument  dedicated  to  the  memory  of  one  of  his  predeces- 
sors,^ considered  it  a  very  economical  step  to  contribute  as 
his  subscription,  old  condemned  cannons  and  useless  chains. 
The  bronze  of  the  cannons  and  of  the  chains  weighed  about 
5,000  kilograms  and  was  worth  about  12,000  francs.  The 
Cour  des  Comptes  declared  that  the  old  cannons  and  the  old 
chains  should  have  been  turned  over  to  the  administration  of 

^  The  transactions  of  "transformation,"  in  which  a  contractor  re- 
ceives old  materials,  with  an  understanding  that  he  has  to  restore 
them  and  use  them  again,  are  permitted  exceptionally  upon  condi- 
tion that  the  transformation  shall  apply  exclusively  "to  materials 
of  the  same  kind  and  intended  to  be  used  again  for  the  need  of  this 
branch  of  service  from  which  they  came."  This  is  the  text  of  the 
circular  note  interpreting  article  43  of  the  decree  of  May  31,  1862; 
the  final  paragraph  of  this  note  declares  in  the  following  terms  that 
the  provisions  according  to  which  the  ministers  shall  not  increase  their 
appropriations  by  special  resources  "do  not  apply  to  materials  which 
may  have  been  used  again  for  a  duly  justified  need  of  this  branch 
of  service  from  which  these  materials  originated." 

2  "I  was  able  to  ascertain,"  said  one  deputy,  "that  for  the  manufac- 
turing of  black  silver  (Tula  work),  where  steel  filings  are  sold  every 
year  for  tens  of  thousands  of  francs,  not  a  penny  is  turned  in  to  the 
Treasury  of  the  State.  It  is  easy  to  verify  this;  it  is  enough  to  look 
over  the  record  of  the  collector  of  domains  who  has  charge  of  selling 
the  discarded  materials  belonging  to  the  State.  Well,  if  you  look  over 
this  record,  you  will  not  find  a  trace  of  one  of  these  transactions." 
Later  he  speaks  of  "works  which  cost  140,000  francs,  of  which  the 
ministry  of  war  had  no  cognizance  beyond  an  expenditure  of  100,000 
francs."  (Speech  of  M.  Borie,  Deputy,  Session  of  March  6,  1888.) 
The  minister  of  war  in  reply  promised  to  make  serious  inquiry  and 
put  an  end  to  any  such  abuses. 

^  M.  de  Chasseloup-Laubat,  at  Marennes. 

xs6 


/ 


UNIVERSALITY  AND  SPECIALIZATION 

domains,  to  be  sold  by  the  latter  and  the  amount  of  the  sub- 
scription for  the  monument  should  have  been  charged  against 
the  appropriation  for  the  Navy;  in  a  word,  the  proper  pro- 
cedure was  not  to  proceed  by  way  of  compensation  but  by 
way  of  distinguishing  the  facts  of  revenue  from  the  facts  of 
expenditure. 

The  report  of  1907,  covering  the  fiscal  period  1905,  shows 
that  5,000  kilograms  of  old  bronze  coming  from  pieces  of 
ordnance  out  of  use  were  ceded  gratuitously  by  the  Minister 
of  the  Navy  for  the  purpose  of  casting  two  monuments,* 
while  the  value  of  the  metal  should  have  entered  the  Treas- 
ury as  a  revenue.  In  his  reply  the  Minister  declared  that  a 
bill,  already  submitted,  attempted  to  regulate  cessions  of  that 
nature  in  the  future. 

In  the  same  way  the  Cour  des  Comptes  does  not  permit  the 
timber  cut  in  the  gardens  and  parks  of  Rambouillet  and  of 
St.  Cloud  to  be  used  in  the  inter iorg  of  the  buildings  nor  for 
the  personal  use  of  the  personnel.  In  spite  of  the  opposition 
of  the  Minister  of  Fine  Arts,  the  Cour  des  Comptes  insists 
that  the  timber  shall  be  sold  by  the  administration  of  do- 
mains and  that  fuel  be  entirely  paid  for  from  the  appropria- 
tions granted  by  the  legislature. 

The  palace  of  the  Legion  of  Honor,  set  on  fire  by  the  Com- 
mune, was  rebuilt  with  funds  collected  by  subscription  from 
the  members  of  the  order.  The  grand  chancellor  of  the  order, 
a  brave  general,  who  knew  more  about  fighting  than  about 
accounting,  did  not  hesitate  for  a  minute  to  apply  the  total  of 
subscriptions  which  poured  into  his  treasury  directly  to  the 
operations  of  reconstruction,  without  having  them  pass 
through  the  budget. ^  In  1878,  the  attention  of  the  Minister 
of  Finance  was  called  to  this  irregularity.^     Then,  in  1881, 

^  Statue  at  Dupuy  de  Lome ;  memorial  to  Doctor  Rochard. 

2  Moneys  collected  through  subscription  for  the  purpose  of  rebuild- 
ing of  the  palace  constituted  "public  funds"  and  as  such  from  the  first 
day  on  should  have  been  entered  among  the  revenues  of  the  State.  In 
the  same  way  the  expenditures  for  the  construction  became  "public 
expenditures." 

3  On  February  5,  1878,  the  Cour  des.  Comptes  submitted  to  the  Min- 
ister of  Finance  memoranda  on  the  subject  of  this  irregularity,  and 
in  conformity  with  the  conclusion  of  the  Cour  des  Comptes  a  special 
accountant  was  appointed  by  order  of  the  Minister  of  Justice  of 
March  i,  1878.  The  general  inspection  of  finances,  on  the  other  hand, 
was  put  in  charge  of  an  inquiry  in  1880,  which  inquiry  had  to  go 
into  the  details  of  the  work  in  the  bureaus  of  the  Legion  of  Honor 
proper. 


THE  BUDGET 

the  necessity  of  an  appropriation  of  73,000  francs  by  the  leg- 
islature for  the  purpose  of  completing  the  building  brought 
the  whole  affair  before  the  chambers  which,  while  granting 
the  demanded  appropriation,  insisted  upon  being  informed  of 
the  details  of  the  work.  Upon  request  of  the  legislature,  the 
inspection  of  finances  continued  the  inquiry  which  it  had  be- 
gun in  1878;  the  Coiir  des  Comptes  got  hold  of  the  account- 
ing end,  and  it  was  ascertained  that  the  total  expenditure 
reached  the  amount  of  1,485,554  francs,  of  which  1,287,076 
francs — resulting  from  the  subscriptions  of  the  members  of 
the  order — were  entirely  ignored  in  the  budget.^  If  the  Coiir 
des  Comptes  and  the  inspection  general  had  not  intervened  in 
time — in  time,  although  everything  was  finished  long  before, 
but  there  was  still  time  for  the  Cour  des  Comptes  to 
act — the  expenditures  of  the  reconstruction  of  the  palace 
of  the  Legion  of  Honor  would  have  figured  in  the  pub- 
lic documents  at  73,000  francs,  instead  of  1,500,000,  the 
actual  figure.  And  then  at  some  late  date  the  anti- 
quarians, examining  official  accounts,  would  discover  to 
their  amazement  that  such  a  beautiful  building  had  cost  so 
Httle.2 

In  order  to  reduce  the  expenditures  involved  in  the  organi- 
zation of  new  regiments  of  cavalry,  decided  upon  by  the  law 
of  July  25,  1887,  the  Minister  of  War  in  1888  ordered  that 
the  unserviceable  mares  placed  with  farmers  should  be  sold. 
Animals  to  the  number  of  864  were  thus  disposed  of  at  a 
price  of  248,199  francs;  this  sum  was,  therefore,  taken  away 
from  the  control  of  the  legislature.  The  Cour  des  Comptes 
insisted  that  the  mares  should  have  been  turned  over  in  the 
regulation  way  to  the  administration  of  domains,  which  would 
have  turned  over  to  the  Treasury  the  proceeds  of  the  sale  by 
auction ;  the  Minister  of  War  should,  on  the  other  hand,  have 
tried  to  obtain  from  the  legislature  the  necessary  additional 


^  Besides  the  proceeds  from  the  subscriptions  the  Legion  of  Honor 
procured  for  itself  a  fund  of  about  100,000  francs  by  converting  its 
3  per  cent,  securities  into  5  per  cent,  securities  through  a  stock  ex- 
change operation  in  1876. 

2  The  grand  chancellor  of  the  Legion  of  Honor,  who  was  declared 
to  be  actually  responsible  for  the  funds,  was  obliged  to  furnish  a  de- 
tailed account  of  the  revenues  and  expenditures  which  were  qualified 
as  not  clear.  This  account,  after  having  been  found  correct,  was 
definitely  audited  by  a  receipt  in  full  of  the  nth  and  25th  of  May, 
1885. 


__         158 


UNIVERSALITY  AND  SPECIALIZATION 

appropriations.^    Each  year  incidents  of  the  same  nature  might 
be  cited. 

Recapitulating  the  above,  the  rules  of  the  principle  of  in- 
clusiveness  or  comprehensiveness  prescribe  that  all  the  reve- 
nues of  the  State  and  all  its  expenditures  be  described  and 
classified  separately  without  reduction,  confusion  or  compen- 
sation, so  that  the  expenditures  as  well  as  the  revenues  shall 
be  equally  subject  to  the  sanction  and  the  control  of  the  repre- 
sentatives of  the  country.  This  is  the  subject  of  articles  i6 
and  43  of  the  decree  of  May  31,  1862. 

Unfortunately,  these  ancient  rules  ^ — the  strict  application 
of  which  the  Conr  des  Comptes  and  the  administration  con- 
tinue to  observe — have  had  to  withstand,  by  virtue  of  law 
and  through  tolerance  in  budgetary  matters,  various  attempts 
at  encroachment,  which,  let  us  hope,  will  continue  to  be 
exceptional. 

Thus,    the   expenditures   for   colleges   are   entered   in  the  Where  the 
budget  only  so  far  as  the  balance  is  concerned,  that  is,  only  ^?^  ^^  ^^^ 
with  regard  to  the  subsidies  which  the  State  allows  them,  justified 

^  The  report  of  the  legislature  relating  to  the  law  of  regulation 
of  the  fiscal  period  1888  (of  March  18,  1892),  which  recalls  the  just 
criticism  of  the  Cour  des  Comptes,  admits  in  its  conclusions  extenu- 
ating circumstances  in  favor  of  the  Minister  of  War. 

2  Few  exceptions,  however,  have  to  be  mentioned  in  the  past.  Thus 
in  1 81 7  and  in  1866  the  balance  of  special  budgets  of  the  public  debt 
and  of  the  sinking  fund  was  alone  entered  in  the  general  budget. 

The  law  of  March  25,  1817,  although  the  public  credit  began  to  be 
established  on  a  solid  base,  deemed  it  necessary  to  provide  as  follows: 
'The  net  proceeds  of  the  registration,  the  stamps,  the  domains  and 
of  the  administrations  of  the  post  and  lotteries  are  intended  for  the 
payment  of  interest  of  the  perpetual  debt  and  for  the  use  of  the 
sinking  fund."  (Chapter  X,  article  139.)  The  deputy  reporting  on 
the  budget  commented  on  this  text  as  follows:  *Tn  order  to  make 
this  specialization  more  tangible,  the  accountable  officers  who  receive 
the  proceeds  in  question  cannot  be  absolved  from  responsibility  un- 
less by  written  acknowledgments  of  receipt  issued  by  the  institution 
which  shall  have  charge  of  the  debt.  (Bank  of  France,  or  Caisse  des 
Depots.)  Moreover,  there  shall  be  prepared  a  distinct  account  of 
revenues  and  expenditures  relating  to  the  public  debt  and  having  the 
form  of  a  'separate  budget.' "  {Report  of  Count  Beugnot,  January 
24,  1817.) 

These  provisions  survived  in  theory  until  1830.  As  the  proceeds 
of  specialized  taxes  have  in  progressing  largely  exceeded  the  amount 
of  interest  of  the  debt  which  they  had  to  meet,  the  special  budget 
deprived  of  all  its  significance  disappeared  quietly.  In  1866  the  law 
of  July  II,  1866,  passed  under  analogous  conditions,  and  for  the  bene- 
fit of  the  sinking  fund,  a  special  budget,  which  ended  in  1870. 

159 


THE  BUDGET 

The  reports  of  the  legislature,  however,  eventually  furnish 
in  the  annexed  documents  information  as  to  the  gross  total 
of  their  expenditures  and  their  revenues.  Following  an  anal- 
ogous sequence  of  ideas,  the  financial  law  of  1890  provided 
that  the  proceeds  resulting  from  sales  of  materials  turned 
over  by  the  Navy  to  the  administration  of  domains,  should 
form  a  separate  budget  classified  among  the  special  services 
of  the  Treasury,  thus  giving  a  chance  for  the  release  of  ap- 
propriations in  proportion  to  the  amounts  realized.  (Article 
39  of  the  law  of  December  26,  1890.)  As  the  opening  of 
this  special  account  caused  justified  protests,^  the  order 
for  its  closing  was  issued  and  its  credit  balance  was  used  to 
reduce  the  deficits  of  the  Treasury.  (Law  regulating  the 
fiscal  period  1892,  article  18.) 

The  fiscal  law  of  June  2,  1891,  put  into  effect  the  deduc- 
tion of  one  per  cent,  from  the  funds  of  wagers  for  the  pur- 
pose of  encouraging  the  horse  industry — the  amount  of  this 
reduction  of  one  per  cent.,  instead  of  being  included  in  the 
list  of  revenues,  increased  by  way  of  fonds  de  concoiirs,  the 
appropriations  granted  by  the  legislature  to  the  ministry 
of  agriculture.  Under  the  pretext  of  insuring  success  in  the 
competition  against  foreign  collectors — and  in  order  to  pro- 
tect our  art  treasures  more  effectively,  to  increase  our  collec- 
tions of  pictures,  statues  and  art  objects — the  fiscal  law  of 
April  16,  1895,  put  into  effect  the  old  idea  of  "a  treasury  of 
museums."  Money  is  put  aside  for  the  benefit  of  the  mu- 
seums of  the  Louvre,  of  Versailles,  of  Saint-Germain  and  of 
the  Luxembourg. 

A  law  of  February  27,  191 1,  granted  financial  autonomy 
to  the  bureau  of  information  on  foreign  legislation  and  to 
the  national  bureau  of  navigation. 

The  National  Superior  School  of  Mining  Engineers  ob- 
tained, by  virtue  of  the  law  of  February  25,  1901,  the  privi- 
lege of  a  special  budget;  the  agricultural  pursuits  of  national 
schools  of  agriculture  and  of  sheep  farms  designated  by  the 
minister  have,  in  turn,  obtained  (law  of  March  30,  1902)  a 

^  See  especially  the  session  of  the  senate  of  December  22,  1890: 
"This  Article  39,"  said  M.  Blavier,  "is  according  to  my  opinion — the 
word  is  not  too  strong,  although  it  is  very  energetic — a  financial 
monstrosity.  Because  its  object  is  to  establish  'a  special  budget  for 
the  navy  alongside  of  the  general  budget  in  contradiction  with  the 
constantly  upheld  principle  of  budgetary  unity,  which  principle  con- 
sists of  permitting  only  one  budget  of  the  State  to  exist. 

160 


UNIVERSALITY  AND  SPECIALIZATION 

special  budget  beginning  with  January  i,  1902.  The  appro- 
priations of  material  for  the  Museum  of  Natural  History 
shall  henceforth  be  allotted  to  this  establishment  as  subsidies, 
in  order  that  they  may  be  included  in  a  special  budget  of 
which  the  said  museums  will  have  the  administration  by  vir- 
tue of  the  fiscal  law  of  1908.  The  same  law  of  December  31, 
1907,  grants  an  analogous  autonomy  to  the  National  School 
of  Arts  and  Crafts,  etc. 

How  many  others  would  like  to  imitate  the  aforesaid  insti-  l"  General 
tutions  and  how  many  may  some  day  succeed  in  doing  it!  'i^  should 
This  lucrative  situation  is  very  eagerly  sought  for.  Commer-  Be  Ad- 
cial  ports,  canals,  rivers,  hospitals,  penitentiaries,  reforma-  ^^^^^  to 
tories,  publishing  institutions,  etc. — in  a  word,  holders  of 
direct  or  indirect  revenues  exercise  their  wits  to  be  able  to 
apply  their  own  revenues  to  their  own  expenditures,  each 
thinking  only  of  himself,  thinking  that  the  horizon  of  his 
own  branch  is  the  horizon  of  the  world,  and  not  seeming  to 
realize  the  very  relative  character  of  his  importance.  The 
principle  of  inclusiveness  or  comprehensiveness  alone  keeps 
these  costly  ambitions  in  their  proper  place;  the  officers  re- 
sponsible to  the  people  who  hold  the  power  are  able  to  main- 
tain this  principle  quite  firmly  in  its  general  outlines,  in  spite 
of  concessions  made  from  time  to  time.  If  they  yielded  to 
pressure  the  entire  budget  would  soon  transform  itself 
into  an  aggregation  of  specialized  branches  of  services. 
The  posts,  the  telegraphs,  telephones,  tobacco,  gunpowder, 
matches  and  excise  administrations  of  all  kinds,  would  become 
just  so  many  independent  personalities — for  whom  the 
budgetary  accounting  would  record  only  the  balances.  We 
should  fall  backward  over  a  fatal  declivity  to  the  plane  of  the 
old  regime. 

When  Algiers  began,  in  1891,  to  claim  a  special  budget  of 
its  own — which,  by  the  way,  was  granted  in  1900 — the  deputy 
who  reported  on  the  subject  declared : 

"We  have  struggled  for  half  a  century  in  order  to  ob- 
tain budgetary  unity;  all  the  ministers  of  finance  have 
striven  for  that  object;  each  year  attempts  are  made  to 
make  this  unity  more  or  less  complete.  With  budgetary 
unity  we  have  acquired  at  the  same  time  order  in  and 
control  over  the  finances.  Now,  less  than  ever,  should 
we  permit  this  group  of  guarantees  to  become  im- 
paired." 

161 


THE  BUDGET 

These  are  the  principles  which  should  be  preserved  at  any 
cost. 

Recapitulating  the  above:  budgets,  if  they  are  to  be  clear 
and  frank,  must  present  their  figures  to  the  legislature  for 
approval  in  such  a  manner  that  they  will  be  all  inclusive,  and 
in  such  classification  that  each  element  of  revenues  and  ex- 
penditures shall  be  set  forth. 

.   ,  .   ^The  Principle  of  Universality  [Comprehensiveness  of 
''?  Plan]  as  Applied  to  the  Budgets  of  England, 

[  .    '  Prussia,  Belgium  and  Italy 

The  English  Parliament  in  1848  adopted  a  rule  in  eflfect  as 
follows:  "Resolved,  That  the  revenues  cannot  be  efficiently 
administered  if  the  total  amount  of  taxes  and  other  sources  of 
public  revenues  are  not  turned  over  to  the  Treasury  or  cred- 
ited to  the  latter."^     (May  30,  1848.) 

In  1856,  this  measure  was  completely  established,  and  the 
total  of  revenues  and  the  cost  of  collecting  the  taxes  appeared 
The  En-        on  the  budget,  so  that  it  might  be  brought  under  the  control 
Practice  ^^  ^^^  House  of  Commons.     This  innovation  resulted  in  the 

same  phenomenon  of  increases  in  the  fiscal  statistics  of  Eng- 
land, as  it  did  in  France  after  18 18.  Beginning  with  1856, 
there  is  an  unexpected  increase  of  £4,500,000  (112,500,000 
francs),  which  must  be  kept  in  mind  when  making  compari- 
sons. 

Not  only  does  the  English  budget  show  the  costs  of  collect- 
ing revenues,  but  it  also  records  with  minute  detail  the 
smallest  revenues  realized  in  the  various  branches  of  adminis- 
tration. There  appears  among  "miscellaneous  revenues"  the 
following  items:  sale  of  objects  and  materials  discarded  by 
the  ministries;  proceeds  of  work  performed  by  convicts;  sale 
of  museum  catalogues  (British  Museum,  National  Gallery)  ; 
proceeds  of  admission  fees  to  the  National  Gallery,  to  the 
British  Museum,  to  the  South  Kensington  Museum,  to  the 
Bethnal  Green  Museum,  to  the  Tower  of  London,  etc.;  pro- 
ceeds of  the  sales  of  old  materials  coming  from  royal  palaces, 
public  buildings,  houses  of  parliament,  buildings  of  adminis- 
trations, rriuseums,  etc. ;  "conscience  money"  or  anonymous 
restitutions;  proceeds  from  the  sales  of  books,  papers,  cards, 
supi^lies,  etc.^  of  the  stationery  office,  etc.^ 

^  Sir  Thomas  Erskine  May,  Constitutional  History  of  England. 
2  The  "finance  account"  contains  about  100  different  items  of  these 

i  162 


tice  in 
Germany 


UNIVERSALITY  AND  SPECIALIZATION 

The  proceeds  of  domains  (woods,  forests  and  land  revenues 
of  the  crown) — no  doubt  shown  at  length  in  the  volume  of 
''finance  accounts"  in  gross  revenues  and  expenditures — are 
not  included  in  the  budget  except  with  their  net  balance.  In 
the  same  way  the  discounts,  refunds  and  restitutions  deducted 
ex  ofhcio  from  the  gross  revenues  resulting  from  taxes  are 
set  forth.  In  an  article,  Sir  Stafford  Northcote,  commenting 
on  the  finances  of  England,  says:  "Almost  the  entire  gross 
proceeds  are  actually  entered  in  the  budget."  This  word  "al- 
most" used  by  him  refers  to  the  expenditures  of  which  we 
have  just  spoken,  which  were  deducted  from  the  revenues  in 
a  sum  of  almost  60,000,000  francs.  Outside  of  this,  the 
principle  of  ''comprehensiveness"  dominates  in  the  system  of 
English  accounting. 

Germany,  until  recently,  did  not  enter  the  gross  cost  of  The  Prac- 
administration  of  posts  and  telegraphs  in  its  budgets — only 
the  net  proceeds.  Thus,  in  1899- 1900,  the  Reichstag  entered 
only  60,000,000  of  francs  of  revenues  in  the  item  of  posts 
and  telegraphs,  although  this  service  actually  brought  in  be- 
tween 450,000,000  and  500,000,000.* 

Now  that  the  budget  of  the  German  Empire  has  discon- 
tinued the  practice  of  deducting  the  expenditures  of  posts  and 
telegraphs  from  their  revenues — entering  the  gross  figures  in 
the  estimates  for  19 12- 19 13 — they  reach  the  amount  of  977,- 
000,000  francs,  while  the  expenditures  entered  on  the  opposite 
page  are  estimated  in  the  same  budget  at  765,000,000  francs. 
An  annexed  statement  shows  the  estimated  net  proceeds  to  be 
212,000,000,  without  remarking  27,000,000  of  extraordinary 
expenditures. 

The  budget  of  the  German  Empire  abstains  also  from  com- 
pensating the  "repartitions"  which  the  Empire  turns  back  to 
the  federal  states  of  Germany  (repartitions  resulting  from 
taxes  levied  in  the  name  of  the  German  Confederation  in  the 
territories  of  the  federal  states),  together  with  the  matricu- 
late contributions  which  the  Empire  receives  from  these  fed- 
eral states.  Political  reasons  are  coupled  with  reasons  of 
accounting  in  order  to  uphold  the  universality  of  the  descrip- 
tion, whereby  the  German  Empire  insists  on  expressing  its 

"miscellaneous  revenues,"   which   are  of   little  importance,  some  of 
them  amounting  to  only  a  few  pounds. 

^  These  various  examples  prove  how  necessary  it  is  to  know  the 
exact  contexture  of  foreign  budgets  before  comparing  them  with 
our  own. 

163 


THE  BUDGET 


The    Prac- 
tice  in 
Prussia 


The    Prac- 
tice  in 
Austria 


Italian 
Practice 


Russian 
Practice 


relations  with  the  federal  states  in  figures.  This  is  done  in 
order  to  show,  on  the  one  hand,  that  the  "repartitions"  con- 
stitute some  sort  of  gift  of  suzerainty  and,  on  the  other  hand, 
the  matriculate  contributions  imply  the  idea  of  a  subsidy  of 
vassalage. 

Strictly  speaking,  Prussia  would  seem  justified  in  render- 
ing only  the  net  accounts  of  its  numerous  [public]  industrial 
enterprises..  Prussia,  however,  states  in  its  budget  the  total 
of  revenues  and  expenditures  of  its  railroads,^  forests,  mines, 
factories,  salt  works,  collieries,  bathing  establishments,  agri- 
cultural domains,  etc.  Thus,  while  on  the  net  basis  only  525,- 
000,000  francs  were  shown  in  191 2-1 91 3,  the  gross  proceeds 
were  3,200,000,000  francs.  The  railroads  alone  show  gross 
proceeds  in  the  budget  of  1912-1913  amounting  to  2,914,000,- 
000,  while  an  annexed  table  estimates  their  net  return  at  only 
284,000,000  francs — after  deducting  all  their  expenditures 
including  interest,  the  amortization  of  their  debts  and  the  pen- 
sions of  employees. 

In  Austria,  the  estimate  of  the  budget  for  Cisleithania — 
through  its  proposer,  Mr.  Dunajewski,  the  Minister  of  Finance 
in  1890— explained  that  if  the  revenues  and  expenditures 
appeared  to  be  increased  by  about  20,000,000  florins  it  was 
because  for  the  first  time  an  attempt  had  been  made  to  intro- 
duce, in  accordance  with  the  rules  of  accounting,  entries  of 
the  gross  operations  of  the  railroads  managed  by  the  State 
for  the  account  of  private  companies. 

Italy,  pursuant  to  its  new  accounting  law,  has  introduced 
the  budgetary  principle  of  "totality"  or  gross  revenues  under 
whatever  title  it  might  be.  (Article  43,  of  the  law  of  Febru- 
ary 16,  1884.)  The  budgets  of  Italy  conform  to  this  prin- 
ciple:    * 

The  budgets  of  Russia  also  distinguish  and  set  forth  in 
great  detail  revenues  and  expenditures. 

^  The  principle  of  universality  with  regard  to  railroads  in  Prussia 
has  manifested  itself  successively.  In  1885  the  Minister  of  Finance 
expressed  himself  as  follows:  "Certain  lines  of  railroads,  which  in 
the  preceding  budget  for  1884- 1885  were  entered  only  with  their  net 
proceeds,  in  accordance  with  the  principles  of  our  public  accounting 
system,  have  been  entered  both  for  revenues  and  expenditures  with 
their  gross  figures  in  the  budget  for  1885-1886."  (Statement  of  Mr. 
von  Scholz,  Minister  of  Finance,  January  19,  1885.)  By  virtue  of 
this  decision  116,000,000  francs  of  revenues  and  expenditures  of  rail- 
roads, which  until  then  had  not  been  subordinated  to  the  general 
rule,  were  included  in  the  latter. 

164 


UNIVERSALITY  AND  SPECIALIZATION 

Belgium,  like  Prussia,  shows  the  operations  of  its  railroads  Belgium 
and  other  utilities  in  gross  and  in  extenso.     The  Belgian  uq^os^s"^ 
budget  enters  as  gross  revenues  the  estimated  proceeds  from  Amounts 
railroads,  telegraphs,  telephones,  posts  and  steamship-service 
of  Ostend,  listing  the  corresponding  expenditures  in  another 
part  of  the  budget.     The  revenues  raised  for  the  municipali- 
ties— 'although  the  Treasury  collects  them  only  to  turn  them 
over — swell  the  budgetary  totals  and  are  treated  separately 
as  a  "special  budget  of  revenues  and  expenditures,"  which 
has  for  its  purpose  showing  "the  funds  of  third  parties  and 
private   individuals  which   the  Treasury  collects  and   reim- 
burses."    (Article  24  of  the  law  of  May  15,  1846.)     Outside 
of  the  operations  of  municipal  funds,  this  budget  pour  ordre, 
also  under  the  regulations,  shows  the  debit  and  credit  entries 
of  savings  banks,  consignations,  etc. 

The  simple  fact  of  its  observation  in  all  countries,  with  a 
few  exceptions,  would  seem  to  be  sufficient  justification  for 
the  principle  of  universality. 

The  Merits  of  the  Principle  of  Universality  [Com- 
prehensiveness OF  Plan] 

It  seems  desirable,  however,  to  specify  the  merits  of  the 
principle.  In  our  opinion  they  are  summed  up  in  two  words: 
economy  and  clearness. 

Economy  undoubtedly  depends  more  on  the  good  will  of  Favorable 
those  who  have  the  power  in  their  hands,  than  on  the  use  of  °  conomy 
a  system  of  accounting;  no  procedure  can,  properly  speaking, 
automatically  bring  about  economy.  Clever  precautions,  how- 
ever, can  warn  a  legislator  against  impulsive  action  and  wise 
regulations  can  protect  him  from  temptation.  If  it  has  been 
proven,  for  instance,  as  we  have  done,  that  the  bringing  of 
revenues  and  expenditures  too  closely  together  favors  abuses, 
the  system  which  avoids  this  dangerous  proximity  will  bring 
about  results  of  economy  in  the  budget. 

When  the  financial  administrations,  prior  to  181 8,  helped 
themselves  at  will  to  the  revenues  in  order  to  pay  their  ex- 
penditures, the  rate  of  the  cost  of  tax  collection  reached  an 
exorbitant  level.  A  report  prepared  in  1830  by  Chabrol,  Min- 
ister of  Finance,  stated  that  from  the  day  when  the  reform 
classifying  the  cost  of  tax  collection  as  public  expenditures 
•  was^  introduced,  the  amount  of  this  cost  decreased  consider- 
ably. 

i6s 


THE  BUDGET 


Makes  for 
Clearness 
of  State- 
ment 


The  second  advantage  of  the  principle  of  universality  is 
clearness :  there  can  be  no  more  compensations  [offsetting  bal- 
ances], extenuations, -concealing  of  revenues  by  expenditures 
or  expenditures  by  revenues ;  as  a  result  thereof,  there  are  no 
more  dark  corners,  no  more  lurking  places  where  suspicious 
operations  can  hide.  M.  di  Rudini,  Prime  Minister,  said  on 
November  9,  1891,  at  Milan:  "Permit  me,  gentlemen,  to 
declare  and  to  repeat  expressly  that  the  deficit  shall  no  longer 
skulk  in  these  famous  'lurking  places'  which  were  so  oppor- 
tunely denounced.  The  excesses  or  the  deficits  of  our  budget 
shall  be  shown  by  a  single  figure." 

All  the  revenues  and  all  the  expenditures  being  described 
and  entered  separately,  the  adding  of  each  column  sums  up 
the  budgetary  situation.  The  budget,  a  separate  one  for  reve- 
nues and  a  separate  one  for  expenditures,  still  remains  the 
same  in  its  conclusion:  balance,  surplus  or  deficit.  M.  Leon 
Say  says:  *'The  principle  of  unity  is  the  principle  of  clear- 
ness. Nobody  can  know  his  financial  situation  unless  he  con- 
siders it  in  its  totality/'  Unity  produces  clearness  by  the 
simple  fact  of  its  simplicity.^ 


Operates 
to   Produce 
Unity  of 
Budget 
Plan 


"Unity  of  the  budget  consists  in  not  making  separate 
accounts,  in  not  attaching  to  the  large  budget  some  small 
budget  of  this  or  that  branch  of  the  service  which  has 
an  accounting  of  its  own.  .  .  .  Unity  consists  in  not 
dividing  the  administration  into  five,  six,  ten  or  thirty 
branches :  a  branch  of  posts  and  telegraphs,  a  branch  of 
tobacco,  a  branch  of  railroads,  a  branch  of  this  or  that 
ministerial  administration. 

"There  is  no  unity  of  the  budget,  if  it  is  not  possible 
to  make  all  the  revenues  enter  into  one  treasury  and  to 
make  the  money  for  all  the  expenditures  come  out  of  the 
same  one  big  common  fund.  There  is  no  unity  of  the 
budget,  if  it  is  not  possible  to  handle  all  the  appropria- 
tions allotted  by  the  Chambers  under  the  same  condi- 
tions with  regard  to  justification,  annulment  and  carry- 
ing forward."  (Quotation  from  a  letter  of  M.  Leon  Say 
on  the  subject  of  the  budget  of  1891.  Journal  des  Debats, 
October  7,  1890.) 


1  On  the  subject  of  the  unity  of  the  budget  consult  also  the  speech 
of  M.  Boulanger,  in  the  Senate,  on  the  occasion  of  the  plan  to  mak'e 
a  special  budget  for  Algiers.    (Session  of  March  2,  1891.) 

166 


UNIVERSALITY  AND  SPECIALIZATION 


The   Rule  of   Specialization    [Special   Funding]    Op- 
posed TO  THE  Rule  of  Universality  [Com- 
prehensiveness OF  Financial  Plan] 

Opposed  to  the  rule  of  comprehensiveness  is  that  of  spe- 
cial funding ;  it  is  necessary,  at  once,  to  define  the  word,  which 
at  first  appears  to  be  strange.  Special  funding  consists  *'in 
isolating  each  branch  of  service  by  separating  from  the  mass 
of  budgetary  operations  the  revenues  and  expenditures  relat- 
ing to  the  branch  in  question." 

It  is,  therefore,  just  the  opposite  of  the  principle  of  com- 
prehensiveness which,  as  we  have  said,  means  grouping  all 
the  revenues  of  the  budget  on  one  page  and  all  the  expenditures 
on  another.  In  case  of  special  funding,  however,  each  branch 
of  service  segregates  the  results  of  its  own  work  in  order  to 
show  separately  its  own  profits  or  deficits.  The  sponsors  for 
this  procedure  claim  that  this  rational  and  businesslike  juxta- 
position of  elements  which  are  intended  to  complete  each 
other,  alone  can  develop  in  the  administrations  a  sentiment  of 
responsibility,  lending  them  encouragement;  the  public  pow- 
ers, on  the  other  hand,  are  thus  enabled,  by  knowing  the  cause, 
to  appreciate  the  results  obtained  within  each  branch  of  the 
service ;  these  advantages  seem  to  be  excluded  from  the  other 
system. 

Already  the  examples  which  have  been  cited  in  connection 
with  the  subject  of  the  state  domains,  forests,  army  and 
navy  arsenals,  houses  of  detention,  maps  and  plans,  etc.,  per- 
mit the  conception  of  the  importance  of  the  supporting  argu- 
ments set  forth  in  favor  of  the  system  of  specialization.  We 
admit  at  once  the  correctness  of  these  supporting  arguments. 

As  far  as  state  forests,  cattle  shelters,  sheep  farms,  garden- 
ing establishments,  industrial  establishments,  posts  and  tele- 
graphs, canals,  rivers,  railroads,  commercial  ports,  etc.,  are 
concerned,  the  legislature  and  the  public  and  even  the  adminis- 
tration itself,  have  an  interest  in  being  able  to*  discover  at  a 
glance  their  definite  situation,  to  find  immediately  the  positive 
criterion  of  the  usefulness  of  their  operations :  the  excess  of 
revenues  or  the  deficit. 

But  with  whom  does  the  duty  to  furnish  such  information 
rest?  Does  it  rest  with  the  budget?  Certainly  not.  We  do 
not  need  to  insist  on  what  we  have  amply  demonstrated  that 
the  idea  of  the  budget  is  incompatible  with  a  system  of  spe- 

167 


Operates 
Against 
the    Princi- 
ple of 
Unity 


Prevents 
Compre- 
hensiveness 
of    Budget 
Statement 


Knowledge 
of   Special 
Undertak- 
ings Should 
Come 
Through 
Special 
Reports 


THE  BUDGET 

• 
cialization.     It  is,  therefore,  necessary  to  look  for  this- infor- 
mation outside  of  the  budget.  ^^ 

In  order  to  obtain  this,  it  would  be  sufficient  to  demand  that 
each  administration  shall  publish  annually  an  explanatory  re- 
port of  its  management,  an  account  of  which  is  absolutely 
necessary  from  all  points  of  view.  In  many  countries,  particu- 
larly in  England,  these  annual  reports  form  an  obligation 
which  is  imposed  upon  the  different  branches  of  the  service. 
On  a  few  pages,  within  limits  set  forth  in  advance,  these 
branches  of  the  service  analyze  the  figures  entered  in  the 
budgets,  compare  the  expenditures  with  the  correlating  reve- 
nues and  describe,  just  as  an  industrial  establishment  would 
do,  the  net  results  of  their  work.  So  far  as  the  majority-  of 
public  administrations  is  concerned,  these  net  results  could 
only  be  obtained  through  questionable  statements,  requiring 
commentaries  and  assumptions;  a  report  only  could  show 
them. 

Then,  the  statistical  tables  of  all  kinds  ^  complete  and  com- 
ment on  these  results  contained  in  the  above  cited  reports. 

In  the  same  way,  the  budget  of  Prussia,  after  having  first 
presented  the  total  of  revenues  and  the  total  of  expenditures 
in  the  text  of  the  bill  proper — as  is  done  in  France — under- 
takes in  its  second  part,  which  is  not  submitted  to  vote,  clearly 
to  specialize  each  of  the  previously  described  industrial  ad- 
ministrations. There  lies  the  field  for  rational  specialization, 
justly  acclaimed :  it  is  lacking  in  France.  Its  pla,cp,  however, 
we  repeat,  and  the  fact  seems  to  be  proven,  is  noi  within  the 
budget  of  the  State. 

^  See  in  Chapter  XXX  the  quotation  from  different  reports  of  the 
Commissaries  of  Internal  Revenues,  Commissaries  of  the  Customs 
Administration,  Director  General  of  Posts,  etc. 


i68 


CHAPTER  VII 

BUDGETARY  ESTIMATES  OF  REVENUES  AND 
EXPENDITURES 

Need  for  an  Accurate  Basis  for  Forecasting:  Two  Qualities  Re- 
quired in  Preparation  of  Estimates;  Temptation  to  Swell  Revenues 
and  Understate  Expenditures. 

Methods  of  Estimating  Revenues :  The  Automatic  [Averaging]  Sys- 
tem; Accepting  the  'Tenultimate  Year";  The  Principle  Only  Par- 
tially Applied;  Correcting  Estimates  Made  by  the  Automatic 
Method. 

System  of  [Estimating]  Increases :  Rapid  Increases  Break  Down  Old 
Rule ;  A  Swinging  Back  of  the  Pendulum ;  Brief  Application  of 
the  Old  Rule;  Return  of  a  Period  of  Rapid  Increases;  Vicious 
Legislative  Practices  Resulting;  The  Reform  of  1883;  The  Aver- 
age Increases  of  Five  Years  Added;  Initiative  Shifted  to  the  Ex- 
ecutive; Difficulties  Encountered  with  Another  Period  of  De- 
creases; Final  Return  to  the  Old  Rule. 

The  Systerri  of  Direct  Estimating:  Methods  of  Estimating  Revenues 
in  Other  Countries;  English  Estimates  Based  on  Known  Present 
Conditions ;  Close  Approximates  to  the  Actual ;  Practice  in  the 
United  States;  The  Experience  of  Prussia  and  Germany;  The 
Practice  in  Italy ;  The  Practice  in  Belgium ;  Possibility  of  Chang- 
ing French  Practice. 

Methods  of  Estimating  Expenditures:  Characteristics  of  Expendi- 
ture— Estimates  and  Authorizations;  Definition  of  the  term  "Ap- 
propriation" :    Provisions  of  Law ;  Author's  Definition ;  Rules  Gov- 

.  erning  Estimates  for  Appropriations:  Two  Main  Considerations; 
Care  Must  Be  Exercised  in  Preparation  of  Supporting  Details; 
Review  by  Minister  Must  Be  Thorough ;  Conditions  to  Be  Attached 
to  Appropriations:  Estimated  Appropriations;  For  Compensation 
to  Revenue  Officers  on  Sliding  Scale;  Premiums  for  Deep  Sea 
Fishing;  Other  Estimated  Appropriations;  Limited  Appropriations; 
Definition  of  "Limited"  and  "Estimated"  Appropriations;  Signifi- 
cance of  These  Terms  in  Controlling  the  Execution  of  Authoriza- 
tions: Tendency  to  Understate  "Estimated  Appropriations";  Need 
for  Great  Care  in  Review  of  These;  Protests  Against  Practice; 
Tendency  to  Overstate  "Limited  Appropriations";  Rules  to  Pre- 
vent Misrepresentation  of  Needs;  Prescriptions  as  to  Method  of 
Estimating.  , 

Value  of  Placing  Responsibility  in  the  Executive:  Economy  Can 
Come  Only  Through  Administration;  French  Distrust  of  Execu- 
tive. 

169 


THE  BUDGET 

The  first  rule  of  budget-making  is  that  of  comprehensive* 
ness  or  completeness  in  entering  all  revenues  and  expendi- 
tures. The  second  is  that  there  should  be  an  accurate  basis 
for  forecasting.  Every  estimate  of  revenues  and  every  esti- 
mate of  expenditures  should  be  based  on  figures  as  exact  as 
possible.  It  is  only  when  these  requirements  are  met  that  the 
budget  will  serve  its  purpose. 

The  necessity  of  making  estimates  does  not  need  to  be 
demonstrated.  The  total  of  appropriations  [requested]  must 
be  submitted  in  figures  to  the  representatives  of  the  country 
who  must  vote  on  them;  furthermore,  an  estimate  is  neces- 
sary in  order  that  expenditures  be  balanced  with  revenues, 
which  is  the  raison  d'etre  of  the  budget. 

Need  of  an  Accurate  Basis  for  Forecasting:  But,  as  esti- 
mates possess  no  value  unless  they  are  based  on  accurate  data, 
the  word  accurate  becomes  paramount  in  this  connection  and 
the  present  chapter  will  be  devoted  to  emphasizing  its  import- 
ance. 
Two  Correct  estimates  demand  two  primary  qualities:  wisdom 

Re  ^uired  in  ^^^  sincerity.  Wisdom  enables  those  engaged  in  preparing 
Preparation  the  budget  to  see  the  future  clearly — as  clearly  as  possible; 
^f  Esti-  sincerity  compels  them  to  state  the  truth  when  they  have  ascer- 

tained it.  These  two  qualities  go  hand  in  hand.  What  is  the 
use  of  being  sincere  if  one  is  not  sagacious;  and  of  what 
value  is  wisdom  if,  through  lack  of  sincerity,  the  light  be  hid 
under  a  bushel  ?  Which  is  better,  not  to  see  the  truth  or  not 
to  tell  the  truth — to  deceive  or  to  be  deceived?  Let  us  re- 
peat, that  the  combination  of  these  two  qualities  alone  leads 
to  correct  estimates. 

Sagacity  is  a  gift  of  mind  which  is  improved  by  experience.^ 
Let  us  hope  that  those  who  prepare  the  budget  have  this  gift, 
because  no  regulation  can  equip  them  with  it. 

On  the  other  hand,  sincerity,  strictly  speaking,  can  be 
achieved  under  effective  regulations  which  are  the  more 
necessary  when  the  temptation  to  insincerity  is  strong — for- 
tunately there  is  no  such  thing  as  irresistible  temptation — at 
least  strong  enough  to  be  feared. 

1  Financial  sagacity  is  increased  by  the  study  of  examples  fur- 
nished by  history,  some  of  which  should  te  followed,  while  others 
should  be  avoided.  Even  when  one  has  made  wrong  estimates,  he 
should  profit  by  his  own  errors.  This  is  what  is  called  experience; 
but  one  should  not  spend  his  entire  life  in  acquiring  it. 

170 


mates 


ESTIMATES  OF  REVENUES  AND  EXPENDITURES 

The  equilibrium  of  the  budget  being  the  problem  of  the 
fiscal  law,  attempts  are  only  too  often  made  to  solve  it  in 
accordance  with  individual  wishes  through  juggling  the  fig- 
ures, which  is  all  too  easily  done.     The  hand  of  the  minister 
of  finance  must  tremble  when,  arriving  at  the  foot  of  the  last 
page  of  the  estimates,  he  puts  down  the  totals.     The  fate  of 
his   fiscal  combinations,   his  own   fate,   perhaps,   depends  on 
the  addition  which  is  thus  made.     If  the  column  of  expendi- 
tures is  the  longer,  a  deficit  with  all  its  consequences  results. 
If,  on  the  contrary,  the  column  of  revenues  is  the  longer,  then  Temptation 
ensues  a  surplus  which   means-  success.      Hence,   a  terrible  Revenues 
temptation  besets  the  minister  to  swell  the  revenues  and  to  re-   and  Under- 
duce  the  expenditures.    In  order  to  achieve  that  result,  it  suf-  state  Ex- 
fices  when  revising  the  first  estimates  to  arrange  them  in  con-  ^^"  ^^^^^^ 
formity  with  his  intentions  until  the  total  yields  the  desired 
result.       Moreover,   voluntary  or  involuntary   illusions   play 
their  part  and  hide  from  the  eyes  of  the  public  and  particu- 
larly from  the  eyes  of  the  author  of  the  budget  the  unworthy 
side  of  these  misrepresentations.^ 

In  France,  therefore,  where  there  is  no  hesitation  to  ques- 
tion either  the  sagacity  or  the  sincerity  of  those  who  prepare 
the  budget,  it  was  deemed  necessary  to  organize  a  so-called 
"automatic"  system  for  the  revenues,  which  leaves  as  little  as 
possible  to  the  discretion  of  those  who  prepare  the  budget. 

Methods  of  Estimating  Revenues 

The  automatic  system  is  the  first  of  the  three  systems  which 
can  be  used  for  estimating  revenues  ^  and  which  we  shall 
examine  in  succession: 

^  Such  an  attempt  to  swell  the  revenues  in  order  to  round  out  the 
budget  is  exemphfied  by  the  interesting  declaration  of  a  senator,  for- 
merly director  general  of  registration,  on  the  subject  of  the  income 
tax:  "The  budgetary  estimates  of  the  law  of  1880  were  officially 
put  down  with  3,257,000  francs,  but  they  have  been  increased  to  the 
present  figure  because  of  the  needs  of  the  cause.  The  estimates  of 
administration  did  not  exceed  1,500,000.  The  reason  why  they  were 
increased  to  3,257,000  francs  was  that  it  was  felt  necessary  to  bring 
about  an  equilibrium  of  the  budget  (general  hilarity).  I  vQuch  for 
that  fact,  which  is  supported  by  official  documents.  I  do  not  say  any- 
thing which  should  cause  great  surprise.  More  than  once  in  the  last 
moment  when  there  is  trouble  about  establishing  the  equilibrium,  the 
revenues  are  increased.  This  happened  also  to  revenues  from  cus- 
toms: This  is  what  happened  in  1880  with  the  income  tax."  (Speech 
of  Senator  Boulanger,  April  9,  1895.) 

^  A  complete  study  of  the  procedures  of  estimating  revenues  should 


THE  BUDGET 

1.  The  automatic  [averaging]   system. 

2.  The  system  of  [estimating]  increases  [and  decreases]. 

3.  The  system  of  direct  valuation  [estimating  de  novo  jeach 
year]. 

Accepting  The  Automatic  [Averaging']  System:    The  automatic  sys- 

!!ltimat?'        ^^"^  ^^  ^^^  ^^  *^^  "penultimate  year";  it  consists  purely  and 
Year"  simply  of  entering  as  the  probable  return  of  the  coming  fiscal 

period  the  actual  results  of  the  last  known  fiscal  period.  In 
this  case  facts  developed  during  the  most  recent  period  of 
twelve  months,  which  precedes  the  time  of  preparing  the 
budget,  serve  as  a  definite  basis  for  the  estimates  of  the 
budget. 

This  procedure  puts  those  who  prepare  the  budget  on  the 
ground  over  which  they  have  been  before ;  it  assigns  to  them 
the  past  as  the  exact  model  for  the  future  and  suggests  to 
them  that  they  enter  as  estimates  the  very  figures  of  collec- 
tions which  were  previously  realized.  The  statements  of  min- 
isters describe  the  system  actually  in  force  in  the  following 
way: 

'The  indirect  taxes  and  revenues  for  1890  were  cal- 
culated on  the  basis  of  actual  collections  made  in  1888,  as 
they  were  published  in  the  Journal  Officiel  of  February  7, 
1889.  The  fact,  however,  of  the  increase  of  the  proceeds, 
due  to  the  year  (1888)  being  a  leap  year,  has  been 
taken  into  consideration."  ^  (Statement  of  February  9, 
'       1889.) 

"The  results  of  the  fiscal  period  of  1894  should,  as  far 
as  the  proceeds  from  the  administration  of  registry-dues, 
customs,  indirect  taxes  and  posts,  serve  as  a  basis  for  the 
valuation  of  revenues  to  be  estimated  for  1896.  ...  It 
is  proper,  therefore,  to  observe  the  regular  rule  and  to 
accept  as  a  basis  for  the  proceeds  of  1896  the  known  re- 
begin  with  the  subject  from  the  point  of  view  of  imposing  taxes, 
then  from  the  point  of  view  of  the  changes  of  rates,  and  finally,  by 
studying  the  estimates  of  the  annual  budget  proceeds.     But  on  ac- 
count of  fear  of  prolonging  and  interrupting  the  sequence  of  our 
statement,  we  shall  speak  only  of  a  yearly  estimate. 

On  the  subject  of  "tax  reduction"  see  the  very  scientific  article 
on  M.  de  Foville  in  the  Dictionnaire  des  finances. 

^  The  day  of  February  29  in  leap  years  represents  7,000,000  in  in- 
direct taxes.  - 


ESTIMATES  OF  REVENUES  AND  EXPENDITURES 

suits  of  1894."     (Statement  of  supporting  arguments  for 
the  budget  of  1896.) 

The  statement  of  supporting  arguments  for  the  budget  of 
1897  adds: 

''We  have  taken  particular  care  not  to  infract  the  rule 
which  shall  serve  as  a  basis  for  the  estimate  of  revenues 
and  by  virtue  of  which  the  resources  for  the  fiscal  period 
1897  were  calculated  in  accordance  with  the  collections  of 
the  penultimate  year.  ..." 

Each  year  the  following  phrase  is  faithfully  repeated : 

"Could  we,  in  order  to  insure  the  equilibrium  of  the 
budget,  suggest  to  you  to  give  up  the  rule  of  the  penulti- 
mate year,  the  rigorous  application  of  which  has  given 
such  fortunate  results  during  the  last  few  years?  There 
is  so  much  less  reason  to  think  about  that  because  .  .  ." 

This  is  the  principle,  the  strict  application  of  which  every 
minister  of  finance  and  every  commission  on  budget  deems  it 
a  point  of  honor  to  proclaim  annually  in  order  to  shield  their 
sincerity  from  any  possible  suspicion.  It  is,  as  we  have  said, 
an  automatic  procedure  because  it  does  not  require  any  intel- 
lectual effort  in  estimating :  the  figures  of  the  last  known 
year^  are  simply  and  verbally  reproduced  both  as  to  their 
totals  and  as  to  their  details.^ 

1  The'  rule  called  "The  rule  of  the  penultimate  year"  when  applied 
strictly  requires  that  the  proceeds  of  this  penultimate  year  be  con- 
sidered as  the  irrevocable  basis  for  the  estimates,  even  if  a  later 
period  of  the  twelve  complete  months  which  expired  before  the  budget 
was  voted  on  furnishes  different  results.  Thus  in  December,  1890, 
at  the  time  when  the  budget  for  1891  was  to  be  voted,  it  was  ascer- 
tained that  the  last  twelve  months  then  knpwn  yielded  7,000,000  more 
than  the  penultimate  year  1889,  which  was  taken  as  the  primary 
basis.  The  chamber  did  not  resist  the  temptation  to  take  this  7,000,000 
into  its  calculations.  The  commisoions  of  the  budget,  however,  ad- 
mitted it  only  under  protest  by  declarinp^  that  the  rule  in  existence 
did  not  warrant  the  entry  of  such- a  surplus  and  that  the  entire 
transaction  could  not  be  made  unless  it  were  declared  absolutely  ex- 
ceptional. (Report  of  the  Deputy  Burdeau,  on  the  budget  for  1891, 
December  6,  1890.) 

2  The  government  and  the  commissions  have  often  insisted  upon 
maintaining  certain  partial'  figures,  the  prieserving  of  which   for  a 


THE  BUDGET 

We  have  to  note  in  this  connection,  however,  that  only  indi^ 
rect  taxes,  monopolies  and  domains  are  submitted  to  the  rule 
of  the  penultimate  year.  If  we  have  generalized  until  now,  it 
is  because  these  classes  of  proceeds  represent  the  bulk  of  the 
revenues  of  the  budget  and  their  fluctuations  might  particu- 
larly be  suspected  of  favoring  abuses.^ 

^'Direct  valuation"  [estimating]^  is  used  for  direct  taxes, 
the  annual  proceeds  of  which  vary  but  little  without  sudden 
drops,  particularly  if  these  direct  taxes  are  assessed  according 
to  varying  methods  of  taxation ;  ^  or,  if  they  are  ordinary 
revenues,  the  direct  valuation  consists  of  correctly  and  directly 
estimating  their  proceeds  in  accordance  with  the  most  con- 
vincing indications  as  we  shall  -see  done  in  foreign  countries. 

With  regard  to  indirect  taxes  and  monopolies  which  are 
subject  to  the  automatic  system,  the  Minister  of  Finance 
makes  corrections  in  the  returns  of  the  penultimate  year  by 
reason  of  innovations  and  exceptional  events  *  affecting  the 


future  fiscal  period  was  manifestly  improbable,  under  the  pretext  that 
the  theory  of  the  automatic  system  requires  the  bases  of  the  penulti- 
mate year  to  be  adopted  in  their  totality. 

^  The  indirect  taxes  and  the  monopolies,  the  proceeds  of  which  fluc- 
tuate continually,  are,  as  a  matter  of  fact,  the  only  ones  upon  which 
the  system  of  automatic  estimating  bears.  "The  proceeds  which  are 
estimated  on  the  basis  of  the  results  of  the  penultimate  year  are  the 
following:  registration,  stamps,  taxes  on  stock  exchange  operations, 
the  4  per  cent,  tax,  custom  duties,  indirect  taxes,  sugar,  monopolies 
and  domains."     (Statement  of  the  budget  for  1913.) 

2  The  legislative  reports  divide  the  revenues  into  three  classes,  ac- 
cording to  the  methods  of  estimating  which  were  used : 

1.  Estimates  established  in  accordance  with  an  automatic  system. 
This  is  the  gross  portion  of  the  budget  of  revenues  containing  indi- 
rect taxes,  monopolies,  domains  or  80  per  cent,  of  the  total  of  the 
budget. 

2.  Estimates  established  in  accordance  with  the  system  of  direct 
valuation,  containing  direct  taxes,  various  revenues,  revenues  for  or- 
der, etc.,  or  20  per  cent,  of  the  total  of  the  budget. 

3.  Estimates  of  revenues  which  have  to  undergo  special  changes 
by  virtue  of  new  laws  or  measures  which  are  liable  to  influence  the 
collections. 

^  The  direct  taxes  to  be  distributed  are  influenced  in  their  annual 
proceeds  only  by  the  movement  of  new  construction  and  demolitions, 
of  revenues  and  expenditures  of  public  domains. 

*  What  are  called  "exceptional  facts"  often  seem  to  be  defined  very 
arbitrarily.  Thus  with  regard  to  taxes  on  corn,  the  value  of  the 
crop  from  the  day  when  it  became  known  should  form  an  exceptional 
fact  liable  to  change  the  estimates.  It  does  not  seem  to  be  legitimate 
procedure  to  maintain  in  a  year  of  good  crops  the  figure  of  import^- 


174 


ESTIMATES  OF  REVENUES  AND  EXPENDITURES 

future  fiscal  period,  such  as  imposing  of  new  taxes,  changing 
of  rates,  new  measures,  leap  year,  etc.^ 

Thus,  the  budget  for  1896,  while  copying  the  figures  of 
1894,  increases  them  by  25,000,000  in  anticipation  of  the  re- 
form of  the  inheritance  tax,  by  15,000,000  on  account  of  the 
proposed  increase  of  the  stamp  tax  on  foreign  securities,  by 
1,200,000  francs  as  a  result  of  measures  outlined  with  regard 
to  the  tax  on  playing  cards,  etc.  In  the  same  way,  the  budget 
for  1906  takes  into  consideration  the  effects  of  the  law  of 
April  22,  1905,  which  increases  the  tax  rate  on  real  estate 
sales  to  7  per  cent,  and  reduces  the  stamp  tax,  which  worked 
out  in  the  one  case  an  increase  of  3,900,000  francs,  and  in  the 
other  a  decrease  of  4,150,000  francs.  The  budget  for  1908 
proceeds  in  the  same  way  with  regard  to  the  stamp  tax  on 
foreign  securities,  tax  (duty)  on  vermouths,  cordials  and 
absinthes. 

For  191 3,  analogous  corrections  refer  to  taxes  on  exchanges 
for  a  consideration,  inheritances,  stamp  taxes,  etc.,  because 
of  new  provisions  suggested  with  regard  to  them. 

But,  aside  from  these  necessary  corrections,  the  automatic 
system  leaves  nothing  to  discretion  or  to  the  sagacity  on  which 
we  insisted  in  the  beginning:  in  the  automatic  system  the  re- 
sults of  the  penultimate  year  constitute  the  only  basis  for  the 
estimates  for  the  year  to  come. 

This  system  did  not  always  exist  in  France.  It  was  in- 
augurated under  the  Restoration,  but  not  at  its  beginning,  be- 
cause the  basis  of  previous  years  was  lacking  the  necessary 


tion  dues  realized  in  a  year  of  bad  crops.  See  on  the  subject  the 
reports  and  discussions  of  the  fiscal  laws  for  1895,  ^896,  1899,  1900, 
1906  and  1913. 

See  particularly  the  report  of  the  commission  on  budget  for  the 
budget  for  1899  (by  M.  Pelletan,  December  24,  1898),  which  reduced 
the  government  estimates  of  the  proceeds  of  custom  duties,  although 
establishe(i  in  accordance  with  the  rules  of  the  penultimate  year, 
that  is,  in  conformity  with  the  results  of  1898,  because  the  return  of 
this  year  has  been  an  exceptional  one.  See  also  the  statement  of 
supporting  arguments  of  191 3,  which  shows  a  reduction  by  145,760,000 
francs  of  the  abnormal  customs  receipts  for  the  year  191 1. 

^  In  the  budget  for  1889,  however,  through  a  deviation  from  the 
regular  course,  the  surplus  values  which  were  anticipated  from  the 
general  exhibition  were  entered  among  the  exceptional  revenues  to 
the  amount  of  12,500,000  francs.  In  the  budget  for  1900  the  Minis- 
ter of  Finance  ignored  these  exceptional  revenues  at  first.  Then 
pressed  by  the  commission,  he  finally  consented  to  enter  them  in  the 
budget  to  the  amount  of  20,000,000. 

175 


THE  BUDGET 


definiteness ;  it  was  established  ^  in  1823  by  M.  de  Villele  who, 
for  the  first  time,  issued  this  new  rule.^ 

Beginning  with  1823  until  the  end  of  the  Restoration  and 
then  during  the  existence  of  the  governnient  of  July,  this  rule, 
made  supreme  in  France,  was  infringed  only  temporarily.  It 
survived  the  Revolution  of  1848  until,  in  the  beginning  of  the 
Second  Empire,  various  changes  began  to  alter  its  course. 

Rapid  In-  System  of  [Estimating']  Increases:    After  1852,  when  the 

creases  increases  from  indirect  taxes  became  very  rapid  and  began 

Down  Old      to  rise  by  leaps  of  from  40  to  50,000,000  each  year,  the  teiip- 

Rule  lation  to  anticipate  such  surpluses  very  naturally  came  to  those 

who  prepared  the  budget.     Why  should  these  supplementary 

returns,  the  materializing  of  which  is  certain,  be  ignored  in 

the  estimates  of  revenues,  they  argued? 

•  "The  old  system  of  procedure  [reference  is  made  to  the 
system  inaugurated  under  the  Restoration]  has  advan- 
tages which  we  do  not  deny.  But  it  has  the  disadvantage 
of  attributing  to  the  revenues  a  value  which  is  always 
inferior  to  the  actual,  and  it  necessitates  the  estimating  of 
expenditures  at  a  rate  which  is  also  known  to  be  far  f)e- 
low  the  actual  level.  From  this  results  the  very  grave  in- 
convenience of  having  a  reserve  budget  alongside  of  the 
admitted  budget."  (Report  of  the  commission  on  budget 
for  the  year  1855,  prepared  by  M.  de  Richemond,  May 
16,1854.) 

The  budgets  for  the  fiscal  periods  1853,  1854  and  1855 
were  therefore  increased  in  their  estimates  by  fifty,  forty-two 

^  Not  until  1823  did  the  Restoration  definitely  discontinue  the  dou- 
zictnes  provisoires. 

2  In  the  beginning  the  annual  fiscal  proceeds  executed  a  fluctuating 
movement  rather  downward  than  upward.  As  soon  as  their  progress 
was  definitely  headed  upwards,  M.  de  Villele  thought  that,  without 
being  bold,  he  could  expect  for  1823  the  same  results  as  were  realized 
in  1821.  He  constructed  then,  and  submitted  to  vote,  the  budget  of 
revenues  for  1823  in  conformity  with  the  results  which  wxre  realized 
in  1821.  Hereafter  is  given  a  quotation  from  his  "statement  of  sup- 
porting arguments"  of  the  budget  for  1823,  in  which  he  manifested 
his  intention  of  establishing  the  new  rule :  "The  progressive  increase 
of  the  proceeds  of  certain  taxes  seemc  to  indicate  as  the  most  probable 
basis  of  estimating  for  the  year  1823  the  reality  of  the  proceeds  dur- 
ing 1 821,  which  was  the  last  year  that  we  were  able  to  study." 

The  events  justified  and  even  exceeded  his  estimates. 

176 


ESTIMATES  OF  REVENUES  AND  EXPENDITURES 


and  thirty-eight  millions  respectively— that  is,  these  amounts 
were  entered  as  revenues  in  excess  of  the  results  of  the  last 
known  fiscal  periods^ 

Between  1855  and  1863,  the  wars  of  the  Crimea,  Italy  and  A  Swinging 
Mexico  did  not  permit  the  application  of  exact  rules  to  the  p^^\  ?^  ***^ 
question  of  estimates.  The  system  introduced  by  the  Resto- 
ration was  at  times  observed  and  at  times  ignored  according 
to  circumstances,^  and  manifestly  no  special  theory  prevailed 
in  those  days.  As  a  result  of  persistent  reclamations  on  the 
j>art  of  commissions  on  budget,  the  ancient  method  [the  rule 
of  the  "penultimate  year"]  was  revived,  and  the  deputy  who 
reported  on  the  budget  for  1864  announced,  the  reviving  of 
the  old  system  in  the  following  words: 

*The  estimates  of  revenues  are  calculated  in  accord- 
ance with   facts  established  during  the  twelve  months 
which  have  preceded  the  preparation  of  the  budget,  that 
is,  they  are  calculated  in  conformity  with  principles  which^  1    . 
were  shown  by  logic  and  experience  to  be  the  best  ones    •  . 

and  from  which  deviations  were  made  only  reluctantly 
and  which  your  commissions  did  not  cease  to  recommend    ^ 
for  adoption."      (Report  of  M.   Busson-Billault,  Aprilj 
10,  1863.)  ' 

The  old  method  thus  put  back  into  operation  soon  acquired 

the  authority  of  a  financial  principle.    It  was  extolled,  praised  Brief  Ap- 

on  every  occasion  anT  considered  as  a  panacea  of  finances.  ^1**^u^*°qij 

Every  report,  every  statement  of  supporting  arguments  -  re-  Rule 

^  In  1863,  for  example,  the  budget  being  in  need  of  a  supplement 
of  79,000,000  francs,  openly  resorted  to  making  increases  in  order  to 
procure  for  itself  the  amount  needed:  "We  suggest  to  you,"  said 
the  report,  "the  addition  of  79,000,000  francs  to  the  estimates  of  taxes. 
This  suggestion  is  easily  justified;  it  is  based  on  the  results  realized 
during  the  months  of  January  and  February."  January  and  February 
of  1863  in  fact  exceptionally  yielded  a  surplus  of  13,000,000  francs. 
Hence  the  conclusion  was  drawn  that,  figuring  upon  an  average  of 
6,500,000  francs  per  month,  78,000,000  francs  could  be  realized  in  a 
year.  (Statement  of  supporting  arguments  relating  to  supplementary 
appropriations  for  the  year  1823.)  In  reality  the  budget  for  1863 
was  offset  with  a  deficit  of  100,000,000. 

2  The  report  pn  the  budget  for  1869  declared:  "As  far  as  revenues 
are  concerned,  their  estimating  is  based  exclusively  upon  the  experi-  • 
ences  of  1867.  No  surplus  of  revenues  has  been  estimated  in  ad- 
vance. This  is  the  application  of  the  rule,  which  you  have  always 
recommended  and  which  offsets  the  contingent  expenses  by  the  coun- 
terbalance of  the  increase  of  revenues."  (Report  of  the  Commission' 
on  Budget  for  1869  by  M.  Busson-Billault,  June  9,  1868.) 

177 


THE  BUDGET 

peated  the  eulogies  of  the  system  in  question.  M.  Magne, 
upon  his  reappointment  to  the  ministry  of  finance,  toward  the 
end  of  1867,  appropriated  this  system  so  cleverly  for  himself 
that,  very  much  to  his  credit,  he  was  always  considered  as  its 
inventor. 

As  soon  as  order  was  reestablished  after  the  events  of 
1 870- 1 87 1,  the  Government  lost  no  time  in  reviving  the 
sound  traditions  of  the  past  and  in  calculating  again  the  reve- 
nues of  the  coming  fiscal  period  in  conformity  with  the  results 
obtained  during  the  last  known  twelve  months.^  This  system 
of  operating  was  regularly  in  force  until  1878. 

Beginning  with  1878,  however,  as  in  1852,  the  return  of 
prosperity  brought  increases  in  the  proceeds  of  indirect  taxes. 
The  collections  made  each  year  began  to  exceed  the  esti- 
mates by  large  amounts.    Two  years  of  large  revenues  super- 
imposed themselves  on  the  original  estimates,  precisely  the 
two  years  which,  as  we  have  said,  separate  the  preparation  of 
Return  of  a    the  budget  from  its  being  put  into  operation.  .  Thus,  to  the 
Period  of        excess  of  revenues  during  the  year  which  preceded  the  putting 
lm:^cases        ^^  ^he  budget  into  operation  was  added  the  surplus  of  reve- 
nues realized  in  the  course  of  the  execution  of  the  budget.    In 
1 88 1,  for  example,  the  budget  prepared  on  the  basis  of  re- 
sults in  1879  was  benefited  by  the  surplus  of  revenues  gained 
in  1880  and  1881.    The  excess  of  collections  over  the  original 
estimates  amounted  to: 

i63,cxx),cxx)  in  1879 
195,000,000  in  1880 
232,000,000  in   1 88 1 

The  Chamber  accustomed  hitherto  only  to  deficits,  could  not 
keep  its  head  at  this  unforeseen  turn  of  fortune's  wheel.  The 
163,000,000,  the  195,000,000  and  the  232,000,000     [of    sur- 

In  the  budget  for  1870  we  find  the  same  eulogy  of  the  new  method. 
The  report  on  the  budget  for  1871,  which  was,  as  we  know,  the  last 
/one  to  be  prepared  under  the  Empire  stated  as  follows:  "The  esti- 
/mates  were  calculated  on  the  basis  of  proceeds  which  were  realized  in 
\  the  preceding  fiscal  period,  that  is,  on  a  perfectly  rational  basis 
which  experience  warrants  considering  as  certain."  (RepoFTUFThe 
Commission  on  Budget,  for  1871,  by  M.  Chesnelong,  June  9,  1870.) 

1  "True  to  correct  financial  principles  of  estimating  budgetary  reve- 
nues, I  had  the  estimate  for  1875  made  after  the  collections  effected 
during  the  fiscal  period  1873."  (Statement  of  supporting  arguments 
of  the  budget  for  1875,  by  M.  Magne,  Minister  of  Finance,  Jan.  2, 
1874.) 

178 


ESTIMATES  OF  REVENUES  AND  EXPENDITURES 

pluses  successively],  which  entered  the  public  treasuries  as 
an  excess  over  estimates,  troubled  the  Chamber.  We  should 
now  have  been  much  better  off  if,  at  this  psychological  moment 
wisdom  had  governed  and  if  proper  use  had  been  made  of  this 
unexpected  wealth. 

On  the  contrary,  these  surpluses  of  revenues  gave  rise  to 
two  tendencies  within  the  assemblies,  which,  acting  together, 
rapidly  destroyed  the  fruit  and  the  seed  of  returning  pros- 
perity.   On  the  one  hand,  the  policy  of  reduction  of  taxes  was 
inaugurated;  after  having  abolished  at  a  single  session  and  Vicious 
without   discussion   the   taxes   on   soap,    chicory,   newspaper  Prfctjcer^ 
stock,  navigation  tolls,  etc.,    170,000,000  of  revenues  from  Resulting 
beverages    and    sugar    were    abandoned.     (Law  of  July  19, 
1880.)     On  the  other  hand,  supplements  to  appropriations,  or, 
in  other  words,   increases  of  expenditures  approved  in  the 
course  of  the  fiscal  period  reached  enormous  figures,  to- wit, 
251,000,000   in    1879,    174,000,000  in   1880,   270,000,000  in 
1 88 1,  etc.    Here  lies,  in  its  two  forms,  the  danger  of  surplus 
revenues :  they  cause  inconsiderate  reductions  of  taxes  and 
expenditures  without  limit. 

In  1882,  therefore,  the  Minister  of  Finance,  M.  Leon  Say, 
considering  it  too  dangerous  to  leave  such  a  bait  within  the 
reach  of  the  assemblies,  preferred  to  abolish  the  surplus  reve- 
nues rather  than  to  see  them  wasted. 

"Every  three  months,"  he  said,  "tables  of  proceeds  of 
indirect  taxes  are  published  in  the  Journal  in  which  tables 
considerable  surpluses  of  revenues  are  shown;  these  sur- 
pluses of  revenues  are  due  to  the  fact  that  the  term  of 
comparison  is  manifestly  too  short,  and  that  it  is  too  short 
is  due  to  the  fact  of  its  being  figured  by  rules  which  have 
become  inexact.  ...  To  continue  to  follow  this  practice 
would  mean  to  open  a  way  to  expenditures  from  an  appro- 
priation, which  might  be  called:  'Undetermined  reserve 
fund  to  be  used  for  whatever  may  be  wanted.'  '*  (State- 
ment of  supporting  arguments  of  the  budget  for  1883, 
March  2,  1882.)  1 

1  The  Minister  added :  "It  is  a  necessity  of  prudence  to  abandon 
the  old  rule.  The  old  rule  doesn't  give  the  truth  any  longer.  One 
does  not  think  to  need  to  consider  the  expenditure,  because  he  has 
treasures  within  the  reach  of  his  hand  and  thinks  he  can  avail  him- 
self of  them.  What  is  a  rule  in  a  matter  of  finance?  It  is  a  pro- 
cedure through  which  one  can  arrive  at  the  truth.     If  you  should 

179 


THE  BUDGET 


The    Re- 
form of 
1883 


The 

Average 

Increases 

of  Five 

Years 

Added 


In  a  word,  the  Government,  discontinuing  the  ancient 
methoci,  undertook  to  swell  the  estimates  by  a  quota  equal  to 
the  average  surplus  of  revenues  for  last  three  previous  years. 
The  known  results  of  the  penultimate  year  would  always 
serve  as  a  first  element  in  estimating;  a  sum  proportionate  to 
the  average  surplus  of  revenues  for  the  last  three  previous 
years  would  be  added  to  it.^  The  Commission  on  Budget, 
after  having  substituted  for  the  average  of  three  years  an 
average  of  five  years,^  adopted,  with  this  change,  the  princi- 
ple of  increases;  the  budget  for  1883,  constructed  ^  and  voted 
on  this  new  basis,  was  benefited  by  more  than  80,000,000  of 
increases  in  revenues  which  were  intended  to  offset  on  paper 
the  steadily  growing  volume  of  budgetary  expenditures.* 
Many  regrets  were  voiced  at  the  time  the  old  method  was 
abandoned : 


"The  principal  objection  to  the  new  system,"  said  the 
senator  reporting  on  the  subject  to  the  Senate,  "is  that  it 
furnishes  for  the  future  an  extremely  easy  way  of  balanc- 

find  that  the  procedure  v^hich  you  have  adopted  for  a  number  of 
years,  after  having  given  you  the  truth  during  all  these  years,  does 
not  give  it  you  any  longer,  v^^hy  should  you  stick  to  it?"  (Speech  of 
M.  Leon  Say,  June  26,  1882.) 

^  "It  is  necessary  to  resolve  to  state  the  truth  in  the  estimates  of 
revenues.  This  truth,  I  have  said,  is  the  revenue  of  the  penultimate 
year  plus  something,  and  this  quotient,  this  percentage,  this  increase 
we  miist  decide,  look  for  it  without  being  sure  to  find  the  truth  at 
once."     (Speech  of  M.  Leon  Say,  June  26,  1888.) 

2  "I  thought  that  it  would  be  sufficient  to  take  the  average  of  the 
la3t  three  years :  The  commission  has  taken  an  average  of  five  years : 
One  thing  is  certain  that  the  more  years  one  takes  to  be  speculated 
on,  the  nearer  he  comes  to  the  truth.  There  would  be,  however,  one 
inconvenience  in  taking  a  rather  long  average.  By  stopping  at  the 
period  of  five  years,  I  believe  we  have  done  something  reasonable 
and  sincere.     (Idem.) 

^  The  results  of  1881  increased  by  average  surpluses  of  the  five 
previous  years,  or  by  80,000,000,  constituted  the  estimates  of  the 
budget  for  1883.  In  order  to  understand  the  mechanism  which  was 
then  adopted,  let  us  take  as  an  example  the  revenues  from  registra- 
tion, stamps,  and  mortgages  which  in  1881  yielded  570,713,000  francs. 
As  their  average  surplus  of  the  last  five  years  represents  a  propor- 
tion of  4.05  per  cent.,  or  23,114,000  francs,  the  total  of  their  estimates 
for  1883  amounts  to  593,827,000  francs. 

*  The  Minister  very  wisely  took  advantage  of  this  surplus  in  order 
to  include  in  the  ordinary  budget  52,000,000  of  expenditures  which 
were  until  then  unduly  classified  in  the  budget  of  extraordinary  re- 
sources. 

180 


ESTIMATES  OF  REVENUES  AND  EXPENDITURES 

ing  the  budget  by  arbitrarily  estimating  the  surplus  of  rev- 
enues at  a  figure  niorejde^^ired  than  certain."  (Report  on 
the  budget  for  1883,  by  M.  Dauphin,  Senate,  December 
12,  1882.) 

"The  defenders  of  the  ancient  method,"  said  the  dep- 
uty reporting  in  the  name  of  the  commission  of  the  Cham- 
ber of  Deputies,  "point  out  that  possibly  by  trying  to  ap- 
proximate the  real  figure  of  revenues  of  one  fiscal  period, 
the  danger  arises  of  not  leaving  a  sufficient  margin  for 
unforeseen  expenditures.  How  is  it  possible,  they  add,  to 
escape  arbitrary  decisions  as  soon  as  one  ceases  to  be 
guided  exclusively  by  the  results  of  the  last  known  fiscal 
period?"  (Report  of  the  Commission  on  Budget,  by  M. 
Ribot,  July  i,  1882.) 


The  system  of  "increases"  consists  of  adding  to  the  nor- 
mal bases  of  estimates  of  revenues  a  supplement  of  a  probable 
surplus  of  revenue.  Through  this,  the  initiative  of  using  fu- 
ture surplus  revenues  was  shifted  from  the  legislature  to  the 
executive.  Without  discussing  whether  it  is  better  to  tie 
down  the  legislature  or  the  executive,  let  us  say  at  once  that 
events  did  not  permit  the  expedient  of  1882  to  furnish  con- 
vincing conclusions.^  Through  an  unfortunate  coincidence, 
the  normal  increases  stopped  short  at  the  time  the  Minister 
intended  to  discount  them;  facts  contradicted  the  Minister  of 
Finance  at  the  beginning.  The  budget  for  1883,  with  it3 
anticipated  and  unrealized  estimates  of  revenues,  showed  a 
debit  balance  of  66,607,000  francs,  a  deficit  which  continued 
during  the  following  fiscal  period.^ 

^  "I  am  absolutely  convinced,"  said  one  of  the  first  successors 
of  M.  Leon  Say,  "that  if,  instead  of  making  the  experiment  in  1881, 
this  experiment  had  been  made  in  1877,  1878,  or  1879,  no  miscalcula- 
tions would  have  resulted  at  least  in  the  first  year,  because  v^e  had 
then  prosperity.  I  repeat  that  that  experiment  would  have  succeeded 
at  that  time.  It  was  its  application  at  the  wrong  time  that  caused  its 
failure."     (Speech  of  M.  Tirard,  November  22,  1884.) 

2  Indirect  taxes. — Surplus  or  deficit  of  the  collections  over  the 
budgetary  estimates : 

1882  plus    94,349,000  francs 

1883  minus    66,607,000 

1884  " 47,890,000 

1885  "  35*646,000 

1886  " 71,311,300 

1887  "  , 22,250,000 

1888  plus     43,446,000 

181 


Initiative 
Shifted 
to  the 
Executive 


Difficuhies 
Encoun- 
tered with 
Another 
Period  of 
Decreases 


THE  BUDGET  ^ 

The  [principle  of]  "increases,"  although  doomed  from  this 
moment,  survived  for  some  time,  however,  because  of  the 
impossibility  of  balancing  the  budget  on  paper  without  them. 
An  ingenious  Minister  of  Finance  admitted  this  fact  in  the 
following  words :  "Last  year,"  he  said,  "I  was  very  strongly 
tempted  to  revert  entirely  to  the  old  system.  Unfortunately, 
gentlemen,  it  was  extremely  difficult  to  reduce  *even  appa- 
rently' the  revenues,  when  we  have  to  meet  expenditures  far 
exceeding  them."  (Speech  of  M.  Tirard,  Minister  of  Fi- 
nance, on  November  22,  1884.)  This  quotation  shows  dis- 
tinctly the  abortive  part  [the  principle  of]  "increases"  played 
in  the  budget.^  In  preparing  the  budget  for  1885,  it  was  de- 
cided to  return  to  the  traditional  rule :  "I  have  resolved  to 
return  absolutely  to  the  old  system,"  said  the  Minister  of 
Final  Re-  Finance  and  the  commission  on  budget  concurred  in  this  sen- 
OM  R°l  ****  timent.  The  estimates  of  revenues  for  1885  were,  in  fact, 
based  on  the  collections  actually  made — on  those  which  had 
been  verified  during  the  penultimate  year;  that  is,  the  year 
1883,  with  the  exception  of  the  proceeds  from  tobacco  and 
posts,  which  temporarily  continued  to  grow.^     In  the  budget 

The  surplus  came  back,  as  we  see,  in  1888,  when  the  estimates — 
regularly  calculated  in  accordance  with  the  ancient  method  which 
was  reinstated — left  a  margin  for  the  natural  progress  of  returns. 

1  In  1883  the  Minister  already  said  in  a  similar  connection:  "With- 
out discussing  the  merits  and  the  inconveniences  of  the  two  methods, 
we  shall  simply  state  that  if  the  revenues  realized  in  1882  were  strictly 
taken  as  a  basis  for  the  estimates  for  1884  it  would  be  necessary  in 
order  to  have  the  budget  in  an  equilibrium  that  the  expenditure  of 
this  fiscal  period  1884  be  lower  by  89,000,000."  Thus  the  estimates 
of  revenues  for  1884  were  increased  solely  in  order  to  procure  on 
paper  89,000,000  of  resources  which  were  indispensable  for  an  ap- 
parent equilibrium.  In  1884,  before  deciding  to  change  the  system, 
the  same  minister  admitted  his  trouble  in  the  following  words :  "The 
method  of  increases  has  given  in  its  total,  results  entirely  too  un- 
satisfactory so  as  to  warrant  the  continuation  of  its  application.  It 
is  impossible,  however,  to  return  to  the  old  system,  because  the  reve- 
nues realized  in  1883  are  smaller  than  the  estimates  of  expenditures 
for  1884  and  1885.  It  is,  therefore,  absolutely  impossible  to  return 
to  the  old  method  of  estimating."  (Statement  of  supporting  argu- 
ments of  the  budget  plan  for  1885,  by  M.  Tirard,  Minister  of  Finance, 
February  28,  1884.)  Only  the  frankness  of  this  declaration  makes  it 
excusable. 

2  The  deputy  reporting  on  the  budget  for  1885  to  the  Chamber  of 
Deputies  said  as  follows:  "We  have  returned  to  the  old  method, 
which  has  never  given  any  miscalculations  and  which  consists  of 
taking  the  figures  of  the  last  known  fiscal  period  as  a  basis ;  we  have 
taken  the  figures  of  the  budget  for  1883.     But  we  have  not  done 

182 


ESTIMATES  OF  REVENUES  AND  EXPENDITURES 

estimate  for  1886,  this  exception  disappeared  ^  and  since  that 
time  the  old  method  has  been  consistently  observed. 

The  automatic  system,  taking  it  all  in  all,  has  dominated  our 
legislative  accounting  almost  continuously  since  its  introduc- 
tion. This  practice,  the  reliability  of  which  excludes  all  fanci- 
ful assumptions,  will,  in  all  probability,  last  for  some  time 
because,  in  spite  of  its  imperfections,  it  seems  to  be  quite 
suited  to  the  French  spirit  because  of  its  reliability. 

The  System  of  Direct  Estunating:     Countries  like  Eng-  Methods  of 

land,  Italy,  Germany,  etc. — owing  to  the  change  in  the  open-  Rev«iues^ 

ing  date  of  the  fiscal  year,  which  leaves  but  a  short  interval  in  Other 

between  the  preparation  and  the  putting  into  effect  of  the  Countries 
budget — need  no  such  inflexible  method  of  estimating: 

"In  all  countries  at  the  present  time,"  said  quite  cor- 
rectly the  deputy  reporting  on  the  budget  for  1883,  "the 
old  rule  of  the  Restoration,  which  I  called  the  classical 
rule,  has  been  abandoned.  All  Europe  calculates  its  rev- 
enues by  procedures  quite  different  from  ours."  (Speech 
of  M.  Ribot,  deputy,  July  24,  1882.) 

In  England,  for  example,  the  submitting  of  the  budget  to  English 
the  House  of  Commons  on  the  eve,  and  even  more  frequently,   S!^*"l*'^^ 
on  the  morrow,  of  the  openmg  of  the  fiscal  year  renders  the  Known 
automatic  fiction  quite  useless.     As  the  taxes  have  yielded  a  P^^^ent 
certain  sum  last  year — which  ended  only  eight  days  ago —     °"  ***°"^ 
they  certainly  will  be  able  to  yield  either  an  equal  sum  or  a 
smaller  or  a  greater  sum,  according  to  the  conditions  which 
affect  them  at  the  given  moment,  or  which  may  affect  them 
within  a  short  time.    The  probabilities  are  so  real  or  so  close 

that  blindly,  it  must  be  understood,  and  not  in  a  mechanical  way. 
We  have  changed  these  figures  in  two  points  only  because  we  have 
the  right  to  do  it  absolutely  and  because  it  has  always  been  done  for 
good  reasons.  The  points  in  question  are  tobacco  and  posts."  (Speech 
of  M.  Jules  Roche,  who  reported  on  the  budget  for  1885,  Nov.  19, 
1884.) 

^  In  the  revised  plan  of  the  budget  for  1886  the  Minister  of 
Finance,  M.  Sadi-Carnot,  condemned  "certain  exceptions  made  to 
the  old  rule  of  estimating  which  has  recently  been  reestablished,  ex- 
ceptions which  do  not  seem  to  be  sufficiently  justified,"  and  he  re- 
established the  application  of  this  rule  in  all  its  severity  by  suppress- 
ing an  increase  of  4,242,000  francs  on  tobacco  and  4,417,000  francs 
on  posts.    (Statement  of  supporting  argimients  of  June  9,  1885.) 

183 


THE  BUDGET 

that  they  are  equivalent  almost  to  accomplished  facts.  The 
Chancellor  of  the  Exchequer  sees  rather  than  anticipates, 
and  no  one  would  think,  therefore,  about  tying  down  his  esti- 
mates by  mechanical  rules  based  on  antiquated  statistics.^ 

The  method  which  the  Chancellor  of  the  Exchequer  applies 
is  called  ^'estimating  by  direct  valuation" ;  by  means  of  this  he, 
in  agreement  with  the  chiefs  of  the  different  branches  of  the 
services,  calculates  the  reasonable  probabilities  of  the  future 
fiscal  period  on  the  basis  of  the  total  of  indications  or  actual 
facts,^  applying  to  the  future  3,  personal  judgment  which  is 
as  clear  as  possible.  Mr.  Goshen,  in  one  of  his  speeches  as 
minister,  described  the  method  of  estimating  in  England: 

"It  does  not  seem  useless  to  explain  to  the  public  how 
our  estimates  are  made.  One  must  not  think  that  the 
minister  considers  the  total  amount  of  revenues  and  says 
to  himself :  'Business  is  not  bad ;  let  us  add  two  millions.* 
That  is  not  the  way  it  is  done.  Every  branch  of  service 
is  responsible  for  the  figures  it  furnishes  to  the  Chancellor 
of  the  Exchequer.  The  board  of  customs  and  excise,  the 
board  of  inland  revenue,  calculate  the  'probable  returns' 
of  every  particular  source  of  revenues  and  make  it  a 
point  of  honor  not  to  make  a  mistake.^  (Financial  state- 
ment of  the  Chancellor  of  the  Exchequer,  April  17,  1890.) 

In  fact,  the  estimates  of  the  English  administration  are 
generally  very  exact,  and,  if  they  have  any  fault  at  all,  it  is 

^  "In  England  how  are  the  estimates  made  ?  They  are  made  not 
according  to  this  or  that  rule,  but  in  accordance  with  the  best  estab- 
lished probability.  It  is  four  or  five  months  since  the  Chancellor  of 
the  Exchequer  has  made  the  Estimates  for  the  year  1 884-1 885,  and 
as  he  knew  that  there  was  a  period  none  too  favorable  for  the  Treas- 
ury, a  period  of  deficit,  he  had  the  prudence  not  to  increase  the 
revenues,  but  to  decrease  the  Estimates."  (Speech  of  Deputy  Ribot, 
November  21,  1884.) 

2  "If  I  should  base  myself  on  the  statistics,  on  the  rumors  which  are 
floating  in  the  City,  on  the  complaints  coming  from  Lancashire,  on 
the  situation  in  Yorkshire,  if  I  should  listen  to  public  rumors,  etc.," 
said  Sir  Vernon  Harcourt  on  April  24,  1893,  while  enumerating  the 
various  elements  which  are  liable  to  influence  the  estimates  of  reve- 
nues. 

^  In  1907  Mr.  Asquith,  Chancellor  of  the  Exchequer,  admitted  with 
reference  to  the  budget  for  1907-1908  that  "the  estimates  of  custom 
duties  and  excise  duties  were  established,  leaving  a  margin  for  what 
can  reasonably  be  anticipated  from  an  increasing  development  of 
consumption."     (Speech  of  April  19,  1907.) 

184 


ESTIMATES  OF  REVENUES  AND  EXPENDITURES 

an  excess  of  moderation.    In  1889- 1890  the  Chancellor  of  the  Close  Ap- 

Exchequer  deemed  it  necessary  to  justify  the  excess  of  reve-  fj°^*^^*^^ 

nues  of  78,800,000  francs,  realized  at  the  end  of  the  fiscal  Actual 
period  by  saying: 

"I  have  been  accused  of  having  prepared  this  success 
by  systematically  making  pessimistic  estimates.  It  is  evi- 
dently impossible  to  estimate  within  a  few  hundreds  of 
such  a  total  amount  of  revenues.  .  .  ,  Being  less  circum- 
spect, we  could  have  had  a  miscalculation  in  case  things 
had  gone  the  wrong  way,  as  such  a  turn  of  affairs  is  al- 
ways possible.  In  reality,  however,  this  surplus  of  78,- 
800,000  francs  did  not  represent  even  four  per  cent,  of 
the  total  amount  of  2,250,000,000  francs  of  revenues. 
And  then,  'it  was  alcohol  that  took  the  lead.'  " 

In  1894,  on  the  contrary,  the  revenues  yielded  13,000,000 
francs  less  than  was  estimated;  2,278,000,000  [were  realized] 
instead  of  2,291,000,000  as  estimated  in  the  budget.  The 
Chancellor  of  the  Exchequer  gave  voice  to  the  following: 

"I  venture  the  remark  that  after  a  period  of  depression 
such  as  the  one  through  which  we  have  just  passed,  it  is 
a  marvelous  result  to  be  able  to  realize  the  estimates 
within  one-half  of  one  per  cent,  of  the  2,300,000,000,  or, 
including  the  collections  of  local  authorities,  of  2,450,- 
000,000."  (Financial  statement  relating  to  the  budget  for 
1894-1895  by  Sir  Vernon  Harcourt,  April  16,  1894.)  ^ 

For  1 905- 1 906  also,  Mr.  Austen  Chamberlain,  Chancellor 
of  the  Exchequer,  increased  in  conformity  with  his  estimates, 
the  proceeds  from  the  inheritance  tax  and  the  stamp  tax.  But, 
he  added: 

"I  estimate  the  revenues  from  customs  to  be  15,750,- 
000  francs  less  than  the  estimates  of  the  last  year  and 
3,250,000  francs  less  than  the  actual  receipts.     I  also 

^  In  1893  the  Chancellor  of  the  Exchequer,  after  having  stated  that 
the  year  1892-1893  balanced  with  a  deficit  of  1,450,000  francs  under 
the  estimates,  added  as  follows:  "I  think  that  the  chambers  will 
recognize  that  where  such  an  enormous  sum  is  involved  the  balance 
is  a  remarkable  degree  of  approximation  which  does  honor  to  the 
knowledge  and  the  clear-sightedness  of  the  officers  of  my  depart- 
ments."    (Statement  of  April  24,  1893.) 

i8s 


THE  BUDGET 


Practice  in 
the  United 
States 


take  into  consideration  the  decrease  of  more  than  10,000,- 
000  in  the  proceeds  from  taxes  [duties]  on  sugar.  I  esti- 
mate the  revenues  from  excises  to  be  32,500,000  francs 
less  than  last  year." 

The  word  "I,"  used  in  every  part  of  the  above  phrase,  indi- 
cates the  direct  estimating  by  the  Minister.  In  the  statement 
of  1912-1913,  Mr.  Lloyd-George  said:  "As  far  as  customs 
are  concerned,  I  anticipate  an  increase  as  a  result  of  the  strike, 
which  of  course  stimulated  importations. 

'*I  expect  an  increase  of  two  per  cent,  on  beer  and  of  one 
and  a  half  on  alcoholic  beverages.  I  count  on  1,102,000,000 
from  the  income  tax  next  year." 

In  the  United  States,  as  has  been  said,  the  establishing  of 
the  budget  of  revenues  precedes  the  opening  of  the  fiscal 
period  by  only  a  short  time;  the  Secretary  of  the  Treasury 
revises  his  initial  estimates  by  the  middle  of  December,  and, 
if  under  such  conditions,  the  realized  facts  do  not  always  agree 
with  the  figures  of  the  budgets,  it  is  rather  the  result  of  succes- 
sive changes  which  the  federal  finances  have  had  to  undergo. 

Until  1 89 1,  as  a  matter  of  fact,  the  United  States  did  not 
know  what  to  do  with  its  surplus  of  revenues.^  Thus,  on 
June  30,  1886,  the  surplus  reached  237,000,000  francs;  on 
June  30,  1887,  227,000,000;  on  June  30,  1888,  598,000,000; 
on  June  30,  1890,  420,500,000.^  The  budgetary  estimates, 
even  the  most  optimistic,  were  exceeded.^  Then,  as  a  result 
of  the  McKinley  bills  and  various  financial  measures  and  with 

^  Every  year  the  use  of  the  surplus  and  the  question  of  the  reduc- 
tion of  taxes  cause  discussions  between  the  partisans  of  the  pro- 
tective tariff  and  those  of  free  trade.  Temporarily,  as  there  was  no 
possibility  of  agreement,  the  ''status  quo"  was  maintained.  "Al- 
though the  necessity  of  reducing  public  revenues  is  generally  admit- 
ted, no  agreement  can  be  reached  as  to  the  means  for  attaining  that 
purpose  or  as  to  the  total  reductions  to  be  made.  The  government 
persists  in  making  the  nation  pay  millions,  which  will  accumulate  and 
lie  idle  in  the  reserves  of  the  Treasury."  (Message  of  President 
Cleveland,  December,  1888.) 

2  "The  American  treasury  suffers  from  a  chronic  surplus  of  reve- 
nues," said  M.  de  Molinari  in  his  monthly  bulletin  in  the  Journal  des 
Economistes. 

3  Not  only  Mr.  Cleveland  upon  going  out  of  office,  but  also  Mr. 
Harrison  from  the  very  moment  of  his  coming  into  office,  stated  the 
trouble  which  the  surplus  of  revenues  causes  to  the  Treasury:  "By 
collecting  more  money  than  is  needed  by  the  progress  of  public  serv- 
ices, unnecessary  duties  are  imposed  upon  the  nation  and  the  normal 
movement  of  affairs  is  disturbed."     (Message  of  Dec.  3,  1889.) 

186 


ESTIMATES  OF  REVENUES  AND  EXPENDITURES 

the  aid  of  an  increase  of  expenditures  particularly  for  pen- 
sions, the  situation  was  reversed:  deficits  took  the  place  of 
surpluses  and  the  collection  of  revenues  fell  below  the  esti- 
mates. For  1 893- 1 894,  for  example,  the  deficit  increased* to 
349,000,000  francs,  while  the  estimates  of  revenues  fell  short 
by  286,000,000;  the  revenues  from  customs  alone  fell  off 
220,000,000.  For  1 894- 1 895  the  deficit  was  reduced  to  215,- 
000,000;  and  to  126,000,000  for  i895-i896;.in  1898-1899  the 
deficit  reached  445,500,000  francs.  In  1902-1903,  on  the 
contrary,  the  surplus  again  appeared,  amounting  to  272,000,- 
000.  Since  then,  the  balance  has  been  maintained,  except  in 
cases  of  extraordinary  expenditures. 

In  Prussia  and  in  Germany,  where  the  fiscal  year  begins  on  The  Ex- 
April  I,  the  estimates  of  revenues,  made  close  to  the  opening  prus\"a\nd 
of  the  fiscal  period,  are  made  in  good  faith  in  consideration  Germany 
of  the  proximity  of  events.     As  far  as  Prussia  is  concerned, 
the  opening  speech  of  the  session  of  the  "Landtag'*  indicates: 
"The  present  fiscal  period  promises  a  surplus  in  accordance 
with  results  ascertained  so  far.    This  condition  of  things  for- 
tunately permits  the  increase  of  the  figures  of  revenues  for 
the  following  year."    Increases  are  made  when  events  between 
January  and  April  indicate  that  such  an  operation  is  justified. 

In  the  same  way,  in  the  German  Empire,  the  bases  for  esti- 
mating are  changed  in  accordance  with  the  circumstances. 
The  fiscal  statement  of  one  of  the  last  budgets,  that  of  1912- 
1913,  reads:  "The  revenues  are  estimated  with  prudence, 
taking  into  consideration  special  circumstances  which  are  liable 
to  influence  the  collections."  In  these  countries  the  abundance 
of  revenues  of  the  state,  called  "industrial"  revenues,  would 
not  permit  of  any  other  procedure. 

Italy  also  proceeds  to  a  very  "prudent  estimate  of  its  reve-  The  Prac- 
nues"  by  means  of  direct  valuation.  M.  Luzatti,  while  using  **"  *"  ^^^'^ 
the  above  expression  in  his  financial  statement  of  November 
8,  1904,  relating  to  the  budget  1905- 1906,  added  that  he  in- 
tended "neither  to  increase  nor  to  diminish  artificially  the 
estimate  of  revenues  and  that  he  would  build  from  results 
ascertained  in  the  course  of  the  present  fiscal  period  in  order 
to  establish  the  budget."  This  system  of  direct  estimating 
has  given  proofs  of  its  merits  in  Italy.  The  ministers  of  the 
treasury  formerly  spoke  only  of  deficits  and  smaller  estimates : 

"As  a  result  of  smaller  estimates  of  revenue  and  of 
increases  in  expenditures,  the  deficit  should  be  entered 

187 


THE  BUDGET 


The  Prac- 
tice in 
Belgium 


Possibility 
of    Chang- 
ing  French 
Practice 


as  amounting  to  47,070,000  francs,  or,  in  other  words,  ex- 
ceeding by  7,800,000  francs  the  first  estimates."     (State- 
.  ment  of  the  revised  budget  1895-1896  by  M.  Sonnino, 
June  13,  1895.) 

Now,  at  the  closing  of  each  fiscal  period,  a  surplus  of  32, 
40  or  69,000,000  lire  is  realized.  Thus,  the  revised  annual 
budgets  were  able  to  open  with  an  item  well  filled  and  bear- 
ing the  heading :  "Excess  estimate  of  revenues  on  the  basis 
of  results  already  obtained.'* 

In  Belgium  no  automatic  system  is  in  force.  The  plan  of 
one  of  the  last  budgets  begins  by  declaring  that  in  their  to- 
tality "The  estimates  of  revenues  were  made  with  modera- 
tion.'* [There  it  is  thought  that]  the  best  method  is  to  esti- 
^^mate  each  kind  of  revenue  separately.  The  proceeds  from 
customs,  for  example,  are  estimated  not  on  the  basis  of  the 
results  of  the  last  year,  which  might  be  exceptional,  but  on  the 
basis  of  an  average  of  the  last  five  years.  The  personal  tax, 
on  the  contrary,  is  entered  with  the  same  amount  as  last  year, 
which  is  an  intelligent  way  to  do  it.  As  far  as  licenses  are 
concerned,  the  economic  situation  of  the  country  is  such  at 
the  end  of  the  year  that  a  considerable  increase  can  be  antici- 
pated. The  same  is  the  case  with  revenues  from  beer,  which 
can  justly  be  supposed  to  exceed  the  five-year  average  on 
account  of  an  increase  in  consumption  during  the  last  year. 
Each  item  of  revenues  has  its  probable  proceeds  analyzed  and 
rationally  figured  out.  Then,  in  December,  a  few  days  before 
the  opening  of  the  fiscal  period,  the  primary  estimates  once 
more  corrected  in  conformity  with  the  last  known  facts,  are 
entered  in  the  final  budget  plan.^ 

All  our  neighbors  prefer  the  greater  exactness  resulting 
from  a  clearsighted  observation  of  facts  to  the  blind  security 
procured  by  the  automatic  method ;  in  their  eyes  the  system  of 
direct  valuation — which  means  only  the  absence  of  a  system 
— is  superior  to  combinations  based  upon  rules. 

In  order  to  follow  these  examples,  however,  France  would 
first  have  to  change  the  opening  date  of  its  fiscal  year,  or  to 
adopt  the  donmemes  provisoircs  as  they  exist  in  Belgium;  it 

^  For  Belgium  consult  besides  statements,  reports  and  official  ac- 
counts the  interesting  work  of  M.  Ernest  Du  Bois,  director  of  the 
Institut  supcrieur  du  commerce  d'Anvers,  under  the  title  Etude  sur 
le  systeme  beige  en  matiere  de  budget  de  VEtat.  Expose  historique 
et  critique.    Brussels,  1904. 

188 


ESTIMATES  OF  REVENUES  AND  EXPENDITURES 

would  have  to  bring  closer  together  the  period  of  estimating 
and  the  period  of  the  budget  proper;  otherwise,  direct  esti- 
mates would  always  remain  doubtful  when  made  so  long  in 
advance. 

Methods  of  Estimating  Expenditures 

The  estimating  of  revenues,  regardless  of  the  degree  of  its  ' 
exactness  never  constitutes  anything  else  than  a  guide,  be- 
cause, in  case  the  actual  proceeds  of  taxes  exceed  the  esti- 
mates, the  collectors  never  refuse  to  take  the  surplus.     The  character- 
expenditures,  on  the  contrary,    are    subjected    to   imperative  Expendi- 
regulations  so  far  as  their  title  and  amount  are  concerned.  The  tures— Es- 
title  of  the  [estimate  and  authorization  for]  expenditures  spe-  ^"^^Z^^.  ^^^ 
cifies  the  only  purpose  for  which  the  expenditure  may  be  made ;  tions° 
the  amount  of  the  [estimate  and  authorization  for]  expendi- 
ture determines  in  just  as  precise  a  way  the  maximum  of 
funds  which  is  allotted  to  this  expenditure.     Thus,  the  figure 
becomes  a  legal  limit  which  may  not  be  exceeded  and  be- 
yond which  accountable  officers  will  pay  out  no  funds;  this 
fixing  of  the  figure,  and  this  specification  of  purpose  as  shown 
by  the  title  govern;  the  two  features  combined  constitute  the 
"appropriation." 

Deiinition  of  the  Term  "Appropriation" :  What  is  an  ap-  Provisions 
propriation?  The  decree  of  May  31,  1862,  did  not  define  ap-  ^^  ^^"^ 
propriation,  but  incidentally  article  41  of  this  decree  pro- 
vides as  follows :  "The  ministers  cannot,  under  their  re- 
sponsibility, expend  more  than  the  amount  appropriated  to 
each  of  them."  ^  Before  that  we  read  as  follows :  "The 
appropriations  [set  aside  ^]  for  the  expenditures  of  each 
fiscal  period  cannot  be  used  for  meeting  the  expenditures  of 
any  other  fiscal  period."  (Article  8.)  These  two  articles 
confirm  the  idea  expressed  above  by  virtue  of  which  the 
appropriations  are  strictly  annual  authorizations,  beyond  which 
the  ministers  may  not  go,  and  which  they  may  not  carry 
forward  from  one  year  to  another  and  to  following  budgets. 
This,  however,  does  not  give  us  the  technical  definition  we 

*  This  [decree]  was  taken  from  the  text  of  the  law  of  March  25, 
1 81 7,  which  was  quoted  above. 

2  [The  terms  "allot"  and  "allotment"  are  not  here  used  because  they 
have  the  technical  meaning  of  an  administrative  authorization  in  this 
country. — The  Editor.] 

189 


THE  BUDGET 

need,  although  it  leads  us  to  such  a  definition.  This  defini- 
tion, in  accordance  with  the  prec'eding  remarks,  without  fur- 
ther comment  can  be  formulated  as  follows : 


Author's 
Definition 


Two  Main 
Considera- 
tions 


Care  Must 
be   Exer- 
cised in 
Preparation 
of    Support- 
ing Details 


Review  by 
Minister 
Must  Be 
Thorough 


An  appropriation  is  an  entry  in  the  budget  [the  legal 
enactment  authorizing  expenditures]  for  the  purpose  of 
an  expenditure  and  of  an  allotment  made  [amount  set 
aside]  for  the  carrying  out  of  that  expenditure."  Or  still 
better :  an  appropriation  is  the  authorization  to  carry  out 
some  work  and  to  expend  for  the  purpose  a  designated 
amount  of  money  in  the  course  of  a  fiscal  period. 

Rides  Governing  Estimates  for  Appropriations:  What 
rules  are  in  force  to  insure  exactness  [reliability]  of  esti- 
mates of  appropriations? 

If  it  were  possible  to  determine  these  rules  in  a  technical 
way,  two  points  of  view  would  have  to  be  taken  into  con- 
sideration :  the  first  relates  to  the  form  of  the  demands  to  be 
made  by  the  administrations;  then  there  is  the  control  which 
these  demands  involve  on  the  part  of  the  Minister  of  Finance 
and  of  the  legislature. 

So  far  as  the  first  question  is  concerned,  it  may  be  said 
that  the  administrations,  before  formulating  their  demands 
for  appropriations,  consult  the  local  agents,  examine  docu- 
ments, recapitulate  accomplished  facts,  or  facts  in  the  course 
of  development,  collect  information  of  all  kinds,  acquaint 
themselves  with  ideas  of  reforms  which  are  under  discussion, 
etc.,  and  only  after  this  preliminary  work  are  the  figures 
of  proposals  for  appropriations  put  down  either  to  an  amount 
equal  to  the  amounts  appropriated  in  the  last  budget  or  in- 
volving an  increase  or,  less  frequently,  a  reduction.  All  this, 
however,  is  but  a  statement  of  general  considerations. 

The  control  over  appropriations  exercised  by  the  Minister 
of  Finance  and  by  the  legislature  involves  more  precise  rules. 
The  comptrollers  of  the  budget  plans  must,  in  fact,  investigate 
whether  the  proposals  for  appropriations,  which  have  been 
submitted  to  them  are:  (i)  not  exaggerated;  (2)  or,  on  the 
contrary,  reduced  below  the  real  needs.  Following  this  se- 
quence, it  is  necessary  to  specify  first  the  distinction  existing 
between  limited  appropriations  and  estimated  appropriations.^ 

^  The  name  of  "voted  works"  is  also  given  to  the  estimated  appro- 
priations in  order  to  indicate  the  fact  that  the  "work"  is  the  principal 
object  of  the  vote.    See  Chapter  XVII  on  this  subject. 

190 


ESTIMATES  OF  REVENUES  AND  EXPENDITURES 


The  definition  given  in  the  beginning"  applies  to  both  kinds  of 
appropriations  and  the  authorization  of  the  legislature  is  nec- 
essary in  each  case,  but  under  different  conditions. 

Conditions  to  be  Attached  to  Appropriations:  The  esti- 
mated appropriations  are  those  the  exact  amount  of  which 
will  be  determined  by  the  execution  of  the  budget.  Their 
definite  figure  depends  on  certain  facts  which  will  be  known 
exactly  only  at  the  end  of  the  fiscal  period.  Those  who 
prepare  the  budget  only  estimate  these  appropriations.^  Let 
us  cite  as  an  example  the  fees  allowed  to  receivers  of  indi- 
rect taxes — fees  calculated  on  a  decreasing  rate  which  is 
scaled  on  the  basis  of  notices  sent  out.  The  fee  is  fixed;  but 
what  is  to  be  the  number  of  tax  notices  sent  out  during  the 
year  ?  The  budget  plan  can  estimate  it  only  in  a  hypothetical 
way.  Therefore,  if  the  number  of  delivered  communications 
exceeds  the  estimates,  the  incumbents  of  receiverships  have 
only  the  right  to  the  salaries  which  were  agreed  upon.  It 
then  becomes  necessary  to  make  supplementary  appropriations 
so  that  they  may  draw  the  residue. 

The  same  is  the  case  with  the  premiums  allotted  to  deep 
sea  fishing;  these  premiums  are  regulated  either  by  metric 
'hundredweight  of  codfish  brought  into  French  ports  or  ex- 
ported from  them,  or  the  per  capita  of  men  on  board.  The 
budget  plan  computes  all  these  elements  and  figures  thepi  out 
approximately.  But  regardless  of  the  amount  of  the  budget- 
ary appropriation,  all  the  exported  or  imported  cod  and  all 
men  on  board  must  be  given  the  premiums  promised  by  law, 
because  the  ships'  owners  have  undertaken  their  operations 
in  anticipation  of  those  premiums.^ 

^  "The  budget  contains  two  kinds  of  provisions :  orders  and  esti- 
mates. The  budget  either  authorizes  a  certain  work  to  be  done,  and 
as  the  price  of  this  work  depends  on  many  circumstances,  the  budget 
limits  itself  to  estimating  the  expenditure  without  making  any  pre- 
tence of  limiting  it;  or  the  budget  limits  in  an  imperative  way  the 
figure  of  the  expenditure  itself."  (Report  of  Count  Duchatel  on  the 
budget  plan   for   1835.) 

2  The  Government  demands  every  year  supplementary  appropria- 
tions for  these  premiums:  "In  matters  of  fishing  it  is  impossible  to 
have  absolute  certainty.  I  was  not  able  to  foresee  one  year  in  ad- 
vance how  much  codfish  would  be  caught  on  the  banks  of  Newfound- 
land. In  past  times  there  certainly  were  some  marvelous  hauls." 
(Speech  of  M.  Lockroy,  minister  of  commerce,  March  29,  1887.) 
The  supplementary  appropriation  was  voted  because  vaudeville  is 
always  successful  in  France. 

191 


Estimated 
Appropria- 
tions 


For   Com- 
pensation to 
Revenue 
Officers    on 
Sliding 
Scale 


Premiums 
for  Deep 
Sea    Fishing 


THE  BUDGET 


Other 
Estimated 
Appropria- 
tions 


Limited 
Appropria- 
tions 


The  same  is  also  the  case  with  regard  to  distribution  of 
the  proceeds  from  fines  and  confiscations  which  are  allotted 
to  the  officers  collecting  them  or  making  them.  The  same 
is  also  the  case  with  regard  to  purchases  of  tobacco  neces- 
sary to  provide  the  monopoly  with  required  materials;  also 
with  regard  to  the  costs  of  transporting  prisoners,  premiums 
for  cultivation  of  silk  worms,  for  silk  mills,  for  schist-oils, 
etc.  ;^  in  a  word,  with  regard  to  all  expenditures  authorized 
by  previous  laws  or  by  the  regulating  tariffs  and  which  are 
automatic,  so  to  speak,  or  follow  the  line  of  accomplished 
facts.  The  legislature  can  only  accept  the  facts  and  ratify 
them.  We  repeat  that  the  previous  approval  by  the  legis- 
lature is  always  necessary;  no  expenditure  can  possibly  be 
made  without  the  appropriation  being  voted,  nor  can  the 
voted  appropriations  be  exceeded.  The  necessary  supple- 
ments, however,  cannot  be  refused,  and  this  is  true  to  such 
an  extent  that  in  case  the  Chambers  are  not  in  session  the 
Government  authorizes  these  supplements  as  a  matter  of 
urgency  under  certain  conditions  which  will  be  described  in 
the  chapter  devoted  to  Additional  Appropriations. 

The  limited  appropriations,  on  the  contrary,  as  their  name 
indicates,  are  strictly  confined  within  their  original  limits. 
Being  granted  for  the  purpose  of  completing  a  specified  piece 
of  work,  they  represent  the  maximum  figure  the  Chambers 
intend  to  allow  for  it ;  the  Government  cannot  incur  nor  per- 
mit ah  expenditure  to  be  incurred  exceeding  this  maximum. 
Thus  the  salaries  of  the  personnel,  office  expenditures,  annui- 
ties, subsidies,  expenditures  for  materials,  secret  expenditures, 
commissions,  subscriptions,  works  of  repair  and  maintenance, 
new  works,  construction,  etc.,  are  regulated  by  means  of 
limited  appropriations.  In  all  these  cases  a  fixed  and  definite 
sum  is  put  at  the  disposal  of  the  Government,  which  must 
content  itself  with  this  amount. 

Recapitulating  the  above,  these  two  kinds  of  appropria- 
tions can  be  defined  as  follows : 


Definition 
of   "Lim- 
ited" and 
"Esti- 
mated" 
Appropria- 
tions 


Limited  appropriations  determine  in  a  definite  way  the 
nature  of  works  and  the  amount  of  money  which  shall  be 
allotted  to  [set  aside  for]  them.  The  estimated  appro- 
priations specify  the  works,  limiting  themselves  to  esti- 

^  The  list  of  estimated  appropriations  is  included  in  a  special  part 
of  the  fiscal  law,  as  it  will  be  shown  in  Chapters  XVI  and  XVII, 
which  are  devoted  to  additional  appropriations. 

192 


ESTIMATES  OF  REVENUES  AND  EXPENDITURES 

mating  the  amount  which  the  carrying  out  of  the  works 
will  cost.^ 

Significance  of  These  Terms  in  Controlling  the  Execution 
of  Authorisations:  What  influence  have  these  distinctions 
upon  the  control  over  the  exact  estimating  of  expenditures? 
They  have  a  material  influence.  For,  according  to  the  kind 
of  appropriation,  there  will  develop  attempts  at  abuse,  and 
different  precautions  must  be  taken  against  them. 

First,  as  far  as  the  "estimated"  appropriations  are  con-  Tendency 
cerned,  the  tendency  of  the  administrations  will  be  not  to  ^°  ^"it**". 
swell  their  budget  estimates,  but  rather  to  reduce  them  in  mated 
order  to  satisfy  the  exigencies  of  the  budget  equilibrium.   Appropria- 
What  difference  does  it  make  to  the  interested  branches  of  the  ****"* 
service,  if  an  insufficient  estimate  for  an  appropriation  is  in- 
serted in  the  primary  plan?     If,  for  example,  the  amounts 
voted  for  the  benefit  of  the  incumbents  of  receiverships,  of 
whom  we  spoke  above,    should   turn  out  to  be   insufficient^ 
to  pay  their  salaries,  it  will  be  necessary  to  make  additional  \ 
appropriations  at  the  proper  time.     If  the  supplies  of  the 
tobacco  monopoly  fall  short  in  the  last  months  of  the  year, 
some  measure  must  be  taken  in  order  to  keep  the  public  sup- 
plied with  tobacco.     In  case  the  stores  and  forage  for  the 
Army  involve  greater  expenditures  than  was  estimated,  the 
supplies  for  men  and  horses  must  be  procured  at  any  cost.^ 
What  do  the  ministers  risk  by  underestimating  expenditures 
of  such  nature?     Possibly  reproach  or  blame?     And  then,  it 
is  so  easy  to  prove  after  the  thing  has  happened  and  having 
the  documents  and  evidence  in  hand — particularly,  if  one  is 
still  in  power,  or  has  powerful  friends — that  all  the  indica- 

^  In  the  texts  of  laws  and  regulations  the  terms  "estimated  appro- 
priations" and  "limited  appropriations"  are  rarely  encountered;  these 
terms  alone  would  be  too  vague.  But  without  attributing  to  them 
a  generic  name  the  laws  and  regulations  quote  these  terms  individu- 
ally in  many  cases. 

2  One  of  the  most  striking  examples  of  intentional  misestimating 
is  the  procedure  which  was  repeated  for  a  long  time  with  regard  to 
proceeds  from  state  forests.  In  spite  of  memoranda  from  the  col- 
lectors, the  budget  plan  persisted  every  year  in  entering  a  lower 
figure  than  the  real  one.  Supplementary  appropriations  were  re- 
peated, therefore,  with  a  regularity  which  finally  attracted  the  atten- 
tion of  the  commission  on  budget.  The  report  of  M.  Burdeau  on 
the  budget  for  1890  declared  that  this  peculiar  procedure  should  not 
be  repeated. 

193 


THE  BUDGET 

tions  and  all  the  information  unite  in  justifying  the  estimate 
at  the  time  it  was  made,  in  spite  of  its  having  apparently- 
turned  out  to  be  incorrect,  etc.^ 
Need  for  The  commissions  on  budget,  anxious  to  perform  their  func- 

hi^^eview^     tions  properly,  must,  therefore,  keep  their  eyes  on  the  esti- 
of  These        mated  appropriations.     The  study  of  memoranda  on  supple- 
mentary appropriations  has  sufficiently  informed  them  of  the 
tendency  of  the  Government  with  respect  to  them.     These 
commissions,  therefore,  must  investigate  whether  under  the 

^  The  following  extract  recapitulates  what  we  have  said  on  the 
subject  of  limited  and  estimated  appropriations:  "You  all  know  that 
there  are  two  kinds  of  appropriations  in  the  budget :  there  are  appro- 
priations which  limit  the  expenditures  to  which  they  apply.  When 
the  Government  consents  to  a  reduction  of  these  appropriations  an 
actual  reduction  of  the  expenditure  becomes  imperative.  But  there 
are  other  appropriations,  the  figure  of  which  as  entered  in  the  budget 
is  nothing  but  an  indication,  a  simple  estimate.  No  matter  what  the 
figure  is,  the  actual  expenditure  shall  not  be  affected  in  any  way  by 
the  figure:  this  expenditure  shall  remain  what  it  should  have  been; 
it  does  not  depend  on  the  Government  either  to  reduce  it  or  to 
increase  it.  This  is  what  we  call  the  'voted  works.'  If,  therefore, 
there  is  trouble  with  regard  to  the  equilibrium  of  the  budget,  and  if 
there  is  an  attempt  to  apply  the  reduction  to  those  chapters  the  appro- 
priations of  which  are  limited,  the  Government  defends  itself  against 
such  a  measure  because  through  similar  reductions  an  obligation 
would  be  imposed  upon  the  Government  to  diminish  the  expendi- 
tures. 

"But  if  the  attack  is  directed  against  the  'voted  works,'  it  means 
against  works  the  expenditure  of  which  shall  be  determined  by  cir- 
cumstances, the  Government  shows  its  willingness.     The  figure  en- 
tered in  the  budget  is  a  matter  of  indifference  to  the  Government: 
the  reduction  of  this  figure  imposes  on  the  Government  no  sacrifice 
whatsoever.  When  reductions  of  this  kind  are  made,  everybody  is  per- 
fectly well  aware  of  the  fact  that  they  are  not  going  to  be  genuine  re- 
ductions, and,  therefore,  the  Government  and  the  Chamber  of  Depu- 
r^^ties  display  deplorable  eagerness  for  making  such  reductions.     They 
1    assume   the   air  before   the   country   of   making   economies   without 
1    really  making  them ;  the  country  is  shown  a  budget  apparently  in 
'^    good  equilibrium.    This  equilibrium,  which  does  not  exist  and  of  the 
non-existence  of  which  responsible  persons  are  very  well  aware,  is 
not  only  a  fictitious  equilibrium,  but  it  is  also  a  mendacious  one." 
(Speech  of  M.  Buffet,  Senate,  December  15,  1897.) 

This  deceitful  procedure  is  by  no  means  a  new  one,  as  the  legis- 
lative Commission  on  Budget  for  1847  mentioned  it  in  the  following 
terms:  "One  of  the  fundamental  conditions  of  establishing  the 
budget  is  to  show  the  truth.  Your  commission,  however,  is  obliged 
to  say  that  this  principle  is  often  disregarded.  This  is  done  in  two 
ways:  one  way  is  to  decrease  the  expenditures  of  Voted  works';  the 
other  is  to  exaggerate  the  estimates  of  works  which  are  not  included 
in  the  list." 

194 


ESTIMATES  OF  REVENUES  AND  EXPENDITURES 

insufficient  primary  demands  is  hidden  the  afterthought  of  a 
supplementary  appropriation  to  be  demanded  in  the  end;  in 
a  word,  these  commissions  have  to  find  out  whether  they  are 
confronted  by  what  is  called  false  economy. 

These  false  economies  have  been  at  all  times  the  plague 
of  the  budget.  ~   ^ 

''Distinction  must  be  made  between  economies,"  said 
the  Minister  of  Finance  in  1876;  "there  are  two  kinds  of 
economies :  The  first  results  from  the  abolishing  of  this 
or  that  work :  this  is  real  economy.  The  second  kind  re- 
sults from  the  fact  that  one  or  the  other  expenditure  was 
estimated  under  its  actual  figure."  The  price  of  one  por- 
tion of  meat  in  the  provisions  of  war  being  arbitrarily  re- 
duced by  the  Commission  from  0.39  franc  to  0.31  franc, 
the  budget  benefited  immediately  by  an  economy  on  paper 
of  14,000,000.  ''But,"  added  M.  Leon  Say,  '*did  they 
make  an  economy  of  14,000,000?  No.  Only  an  estimate 
was  made  which  is  possibly  closer  to  the  real  facts  than 
any  other;  this  the  future  will  disclose;  but,  at  any  rate, 
it  can  not  be  said  that  an  economy  was  made."  ^  (Ses- 
sion of  December  16,  1876.) 

When  these  false  economies  produce  their  inevitable  and 
intentional  consequences,  viz. :  additional  appropriations,  the 
discontent  of  the  chambers  manifests  itself  in  belated  pro- 
tests :     "These  are   false   reductions !  .  .  .  Such  procedures  Protests 
should  absolutely  be  forbidden  in  a  fiscal  law!"     (Session  of  Against 
the  Senate  on  December  25,   1887.)     "It  is  not  a  mystery 

^  The  price  of  rations  of  bread,  foodstuffs  and  forage  has  always 
caused  the  most  fantastic  estimates.  Sometimes  the  Government 
struggles  against  the  commissions  on  budget  for  the  sake  of  budgetary 
sincerity — we  cited  one  of  the  rare  examples — most  often,  however, 
the  commissions  on  budget  criticize  with  perfect  right  excessive  re- 
ductions of  estimates  by  means  of  which  the  Government  pretends 
to  maintain  the  equiHbrium.  "Just  to  cite  one  example,"  said  the 
deputy  reporting  on  the  budget  for  1871,  "we  have  increased  by 
6,000,000  the  appropriation  for  food  and  forage  in  the  Army  and 
Navy.  It  was  not  the  expenditure  which  was  increased,  it  was  our 
estimate  which  became  more  positive.  We  simply  had  made  our  esti- 
mate agree  with  the  actual  facts  by  adding  to  the  original  budget  a 
charge  of  which  the  supplementary  appropriations  shall  be  freed. 
The  only  way  to  avoid  deficits  in  the  accounts  is  to  measure  exactly 
the  expenditures  in  the  budget."  (Report  of  the  commission  on 
budget  for  1871  by  Deputy  Chesnelong,  June  9,  1870.) 

195 


Practice 


THE  BUDGET 


Tendency  to 
Overstate 
Need  for 
"Limited 
Appropria- 
tions" 


to  anyone  that  the  procedure,  unfortunately  used  too  often 
for  economy,  consists  in  reducing  the  expenditures  when  obli- 
gatory appropriations  are  involved  and  then  of  'demanding 
in  the  course  of  the  fiscal  period  supplementary  appropriations 
which  cannot  be  refused  because  certain  obligations  have  been 
incurred."  (Report  of  the  Senator  Boulanger,  March  17, 
1894.)  The  same  senator  explains  in  another  connection  how 
the  members  of  legislative  commissions,  desirous  of  submit- 
ting to  the  Chamber  a  nice  round  sum  of  economies,  easily 
obtain  from  the  administrations  all  kinds  of  reductions  of 
the  items  of  estimated  appropriations.  Various  examples  of 
intentional  misestimates  support  this  assertion;  for  instance, 
misestimates  on  purchases  and  transports  of  tobacco,  on  the 
premiums  for  deep  sea  fishing,  for  silk  mills,  misestimates  on 
allowances  paid  to  incumbents  of  receiverships,  to  excise  of- 
ficers, misestimates  on  purchases  of  forage  for  the  department 
of  war,  misestimates  on  the  premiums  for  the  merchant 
marine.^ 

A  different  policy  is  necessary,  however,  with  regard  to 
limited  appropriations.  The  Government  is  well  aware  that 
in  general  an  appropriation  of  that  kind  for  bureau  expenses, 
expenditures  for  materials,  salaries  of  the  personnel,  subsi- 
dies, subscriptions,  secret  funds,  etc.,  shall  constitute  after 
being  voted  on  once  the  maximum  of  what  it  can  spend; 
undoubtedly,  supplementary  appropriations  can  be  demanded 
later,  but  these  demands  are  liable  to  fail,  or  they  may  need, 
in  order  to  succeed,  all  kinds  of  exceptional  proceedings, 
solicitations  and  explanations.  The  Government  is,  therefore, 
naturally  inclined,  as  far  as  limited  appropriations  are  con- 
cerned, to  demand  the  highest  possible  amount  in  the  very 
beginning.  The  legislative  commissions,  therefore,  must  con- 
sider these  demands  from  the  point  of  view  of  their  probable 


^The  commission  on  budget  for  1890  thus  explained  its  func- 
tion from  this  point  of  view:  "It  is  wise  economy  to  provide  for 
all  justified  needs  of  the  services:  By  so  doing  all  plans  of  supple- 
mentary appropriations  are  cut  short;  repeatedly  improper  demands 
were  hidden  under  such  supplementary  appropriations.  For  this  rea- 
son we  suggest  the  increase  by  6,000,000  of  several  appropriations  the 
insufficiency  of  which  has  been  ascertained.  We  thus  would  hasten 
the  disappearance  of  an  inveterate  habit  which  is  detrimental  to  the 
clarity  and  well-being  of  our  finances."  (Report  of  March  23, 
1889.) 

See  also  what  M.  Pelletan  has  to  say  in  his  report  on  the  budget 
for  1889. 

196 


ESTIMATES  OF  REVENUES  AND  EXPENDITURES 


exaggeration  and  investigate  whether  there  is  any  possibility 
of  reducing  their  figures.^ 

Recapitulating,  the  rules  of  control  hitherto  formulated, 
seem  to  consist  in  suppressing  deceptive  economies  which  lie 
concealed  in  estimated  appropriations  and  of  bringing  about 
real  economies  involved  in  the  limited  appropriations.  These, 
however,  are  not  rules  in  the  proper  sense  of  the  word;  they 
are  only  suggestions  and  recommendations  which  by  no  means 
possess  the  authority  of  a  rule  of  accounting. 

There  is,  therefore,  no  rule  of  accounting  on  the  subject 
of  expenditures. 2  At  the  most,  statements  of  supporting 
arguments  or  the  reports  of  the  commissions  mention  at 
times  certain  automatic  bases  which  can  be  applied  to  ex- 
penditures of  a  particularly  variable  kind.  For  a  long  while, 
for  instance,  the  rations  of  bread,  foodstuffs  and  forage  in 
the  ministry  of  war  were  calculated  on  the  basis  of  the  cost 
price  during  the  fourteen  preceding  years,  after  deducting  the 
two  best  years  and  the  two  worst  years.  The  budget  for 
1883  abolished  this  decennial  average  '*on  account  of  the  finan- 
cial situation."  ^  In  the  same  way  the  costs  of  lodging  re- 
servists were  estimated  in  the  lump  at  the  rate  of  a  month's 
interest.     (Report  of  the  Deputy,  Jules  Roche,  July  23,  1894.) 

In  the  same  way,  in  Germany,  the  expenditure  relating  to 
bread  for  the  Army  is  determined  one-half  by  the  average 
price  of  wheat  over  ten  years  and  the  other  half  by  its  price 
at  the  end  of  the  current  year.     Doubtless,  examples  could 

^  The  Government,  however,  by  means  of  a  minimum  limited  appro- 
priation can  begin  considerable  vs^ork  which  under  any  conditions 
must  subsequently  be  paid  for.  "Protests  have  been  made  repeatedly 
against  the  habit  of  certain  administrations  which  abused  the  confi- 
dence of  the  legislature  by  demanding  only  a  minimum  appropriation, 
by  means  of  which  they  start  numerous  works."  (Report  of  Deputy 
Felix  Faure  on  the  regulation  of  the  budget  for  1882,  March  9,  1890.) 
The  distinction,  therefore,  has  no  absolute  character  such  as  we  are 
attributing  to  it  theoretically  in  the  foregoing  lines. 

2  The  decree  of  May  31,  1862,  contains  no  article  relating  to  esti- 
mating expenditures  except  possibly  the  following:  "The  expendi- 
tures for  material  and  for  personnel  shall  be  presented  distinctly  and 
separately." 

*  The  words  "on  account  of  the  financial  situation"  have  a  particu- 
lar flavor  in  this  connection.  They  mean  to  say  that  the  estimates 
admitted  hitherto  became  really  too  embarrassing  from  the  point  of 
view  of  the  equilibrium  on  paper.  See  the  phrase  of  the  report  itself 
where  the  idea  is  expressed  without  mincing  words.  (Report  of  the 
Commission  on  Budget  for  1883,  on  the  ministry  of  war,  July  i, 
1882.) 


Rules  to 
Prevent 
Misrepre- 
sentation 
of  Needs 


Prescrip- 
tions  as  to 
Method  of 
Estimating 


THE  BUDGET 

be  multiplied  of  cases  in  which  only  isolated  details  have  been 
given  without  deriving  therefrom  any  definite  and  regular 
system. 


Economy 
Can  Come 
Only 
Through 
Adminis- 
tration 


French  Dis- 
trust of 
Executive 


Value  of  Placing  Responsibility  on  the  Executive 

What  an  expenditure  represents  and  what  it  will  always 
represent  is  in  the  hands  of  those  who  carry  out  the  act.  The 
Commissions,  in  spite  of  their  zeal,  can  never  compel  the  Gov- 
ernment to  economize  if  the  Government  will  not  do  so  volun- 
tarily. The  legislature  undoubtedly  holds  the  purse  strings, 
but  the  purse  is  at  the  discretion  of  the  executive  power  which 
uses  and  handles  the  money.  The  legislature  must  place  some 
confidence  in  the  Government,  and  the  most  essential  thing  is 
to  place  it  in  the  right  people. 

The  estimating  of  revenues  as  well  as  the  estimating  of 
expenditures  constitutes — if  we  recapitulate  this  chapter — a 
problem  of  tact,  experience,  perspicacity  and,  above  all,  sin- 
cerity. As  far  as  revenues  are  concerned,  France  acts  under 
the  automatic  system — a  system  which,  on  account  of  a  pro- 
nounced distrust  [of  the  executive],  permits  the  formulation 
of  precise  rules.  But,  so  far  as  expenditures  are  concerned, 
nothing  similar  could  be  invented,  and,  therefore,  mental  and 
moral  qualifications,  as  enumerated  above,  are  the  only  things 
which  can  guide  those  who  prepare  and  control  the  budgets. 

We  have  already  answered  the  first  two  questions:  Who 
prepares  the  budget,  and  when  is  the  budget  prepared  ?  Then, 
as  far  as  the  third  question  is  concerned,  viz.:  how  is  the 
budget  prepared  ?  the  rules  relating  to  the  estimating  of  public 
revenues  and  expenditures  have  been  reviewed.  Let  us  begin 
now  a  study  of  the  form  of  budgets,  a  study  of  the  detailed 
analysis  of  subjects  contained  in  the  volume  carrying  the 
budget  plan. 


198 


CHAPTER  VIII 
CONTENTS  OF  THE  [FRENCH]  BUDGET 

The  General  Budget  and  the  Annexed  Budgets:  Physical  Contrast 
of  English  and  French  Budgets;  Main  Subdivisions  of  French 
Budget ;  Statement  of  Supporting  Arguments ;  Prepared  by  Minister 
of  Finance;  Subjects  Discussed;  Text  of  the  Fiscal  [Appropriation] 
Bill:     Provides  for  Ordinary  Functions;  Definition. 

Precedence  of  Expenditures  Over  Revenues  in  the  General  Budget: 
Reverse  Procedure  to  That  Followed  by  Individuals;  Necessity  for 
Determining  Needs  First;  Argument  in  Favor  of  Determining  the 
Possible  Revenue  First. 

Details  of  Expenditures  Entered  in  the  Ordinary  Budget:  Principal 
Subdivisions  of  Ordinary  Expenditures;  Provisions  for  Meeting 
Public  Debt;  Cost  of  Regular  Departmental  Activities;  Cost  of 
Collecting  Revenues;  Reimbursement  of  Over  and  Double  Pay- 
ments. 

Details  of  Revenues  Entered  in  the  General  Budget :  Levy  of  Direct 
Taxes;  Authority  to  Collect  Separate  from  Levy;  Cannot  Collect 
Till  After  Budget  Passes;  Estimates  of  Amount  to  Be  Realized 
Follows  Authorization;  Classification  of  Estimates;  Direct  Taxes; 
Indirect  Taxes;  Proceeds  of  Monopolies;  Proceeds  and  Revenues 
of  State  Domains ;  Various  Proceeds  of  the  Budget ;  Exceptional 
Resources;  Routine  Revenues — Deductions  from  Expenses;  Those 
Covering  Expenses  in  Part;  Those  Completely  Offsetting  Expendi- 
tures; Question  as  to  Whether  These  Should  Be  in  Budget;  Re- 
capitulation of  Comment  on  the  General  Budget. 

Section  II  [of  the  Appropriation  Bill]  Annexed  Budgets ;  Contents  of 
the  Annexed  Budgets;  Each  State  Enterprise  Has  Its  Separate 
Budget ;  Why  Part  of  State  Enterprises  so  Treated ;  Central  School 
of  Arts  and  Crafts ;  National  Printing  Office ;  The  Public  Telephone 
Service;  Railways  and  the  Port  of  La  Reunion;  Argument  Favor- 
ing the  Special  Funding  of  Railroads ;  The  Legion  of  Honor ;  Gun- 
powder Monopoly;  The  Mint  and  Postal  Savings  Bank;  Two  Ob- 
jections to  Special  Funding;  Accounting  Features. 

The  General  Budget  and  the  Annexed  Budgets 

The  French  budget  plan  presents  itself  in  the  form  of  a 
large  volume,  made  up  of  several  books,  the  pages  of  which 
go  on  increasing  yearly.^    The  data  which  this  volume  contains 

*  The  volumes  of  the  budget  contain  about  2,8oo  pages. 

199 


THE  BUDGET 


Physical 
Contrast  of 
English 
and   French 
Budgets 


Main   Sub- 
divisions 
of   French 
Budget 


have  grown  in  number  since  the  beginning  of  the  century ;  but 
there  is  no  necessary  correlation  between  the  totahty  of  the 
figures  and  the  bulk  of  the  book.  In  England,  in  spite  of  the 
development  of  functions,  the  Finance  Accounts  and  Stastis- 
tical  Abstracts  ^  have  changed  very  little  in  their  dimensions. 
They  are  small  booklets,  which  can  easily  be  put  in  the 
pocket.^  But  who  would  attempt  to  put  the  French  budget 
in  his  pocket  ?  ^  Although  its  appearance  is  by  no  means  in- 
viting, it  is  necessary  to  approach  with  courage  these  vol- 
umes in  order  to  analyze  them.  We  find  in  the  French  budget 
the  following  three  main  divisions: 

1.  Statement  of  Supporting  Arguments. 

2.  The  Text'of  the  [Appropriation]  Bill. 

3.  The  Appendix  of  Documents. 


Statement  of  Supporting  Arguments 


Prepared 
by   Min- 
ister  of 
Finance 


The  general  budget  of  the  State,  when  submitted  to  the 
Chamber,  needs  a  preface,  explanatory  of  contents;  the  Min- 
ister of  Finance  draws  up  this  preface,  in  which  he  com- 


^  The  Internal  Revenue  Commissioners  without  doubt  enlarged  the 
size  of  their  report  and  increased  the  number  of  its  pages  about 
ten  years  ago.  But  in  spite  of  that,  they  use  no  more  paper  for 
giving  an  account  of  the  2,500,000,000  francs  of  collections  than  they 
used  in  accounting  1,500,000,000  francs.  The  Finance  Accounts  al- 
ways contain  the  details  relating  to  the  total  of  the  financial  situation 
on  105  pages,  although  an  amount  of  more  than  4,500,000,000  francs 
of  revenues  and  of  expenditures  is  involved. 

2  [While  there  is  real  merit  in  this  comparison,  it  is  in  a  measure 
misleading:  (i)  For  the  reason  that  what  the  English  call  their 
"Budget"  is  the  Financial  Plan  and  Summary  submitted  to  Parlia- 
ment and  laid  before  members  by  the  Chancellor  of  the  Exchequer 
with  his  "budget  speech,"  while  what  the  author  refers  to  as  the 
French  "Budget"  is  more  nearly  akin  to  the  great  quarto  volumes 
laid  before  Parliament  early  in  the  session  as  "The  Estimates";  (2) 
because  the  author  uses  the  word  budget  in  not  less  than  four  senses, 
as  is  explained  in  the  editor's  footnote  on  page  285. — The  Editor.] 

^  A  small  manual,  recapitulating  the  essential  figures  of  the  budget, 
would  constitute  a  very  desirable  innovation.  With  all  the  mass  of 
official  papers  on  hand,  such  a  simple  and  useful  compendium  is 
lacking.  There  is  no  doubt  as  to  the  fact  that  the  compiling  of  a 
small,  handy  summary  would  cause  more  trouble  to  the  Administra- 
tion than  the  routine  compilation  of  the  innumerable  columns  of  the 
adtual  budget.  But  this  excess  of  work  on  the  part  of  the  Adminis- 
tration would  be  precisely  the  thing  which  would  benefit  the  public 
to  a  large  degree. 


200 


CONTENTS  OF  THE  [FRENCH]  BUDGET 

ments  on  his  own  proposals  and  those  of  his  colleagues.    The   Subjects 
drawing  up  of  this  "statement  of  supporting  arguments,"  as    Discussed 
we  have  said,  constitutes  one  of  the  prerogatives  of  the  Min- 
ister of  Finance. 

In  order  to  indicate  what  the  statement  of  supporting  argu- 
ments is,  or  what  it  should  be,  let  us  analyze  the  last  one.  Let 
us  begin  the  study  of  this  document  from  a  general  point 
of  view,  by  specifying  the  subjects  with  which  it  customarily 
and  essentially  deals. 

1.  The  statement  of  supporting  arguments  sums  up  the  de- 
velopment of  the  public  wealth.  The  finances  of  the  State 
are  in  such  close  relation  with  the  commercial  and  industrial 
activities  that  it  is  not  necessary  to  insist  on  the  propriety  of 
such  an  introduction. 

2.  It  gives  an  account  of  matters  relating  to  prior  fiscal 
periods,  not  yet  audited,  and  also  discusses  the  current  fiscal 
period. 

3.  It  analyzes  the  condition  of  the  Treasury;  it  gives  the 
figure  of  the  floating  debt,  the  amount  of  the  de converts  (un- 
covered balances)  of  the  Treasury,  reviews  the  special  func- 
tions as  well  as  the  various  methods  adopted  by  the  Treasury 
to  insure  a  proper  application  of  revenues  to  the  expendi- 
tures. 

4.  After  having  segregated  these  primary  elements,  the 
Minister  approaches  the  principal  part  of  his  work  by  draw- 
ing up  a  summary  of  estimates  for  the  future  fiscal  period: 
he  estimates  both  revenues  and  expenditures;  then  he  ba,l- 
ances  the  budget ;  suggests  a  means  of  covering  the  deficit,  if 
any,  and  how  the  surplus,  if  any,  shall  be  applied.  This  is 
the  Jargest  part  of  the  work. 

5.  Finally,  it  nearly  always  indicates  proposed  changes  with 
a  view  to  improving  the  fiscal  or  budgetary  legislation. 

No  regulation  prescribes  that  these  five  divisions  shall  be 
followed  either  as  to  contents  or  as  to  sequence.  There  are, 
however,  very  few  statements  of  supporting  arguments  in 
which  these  divisions  are  not  found,  because  they  impose 
themselves  upon  the  minds  of  officers  who  prepare  the 
budget.^ 

^  All  statements  of  supporting  arguments  in  France  seem  to  ema- 
nate from  a  uniform  mold;  with  the  exception  of  a  few  pages  the 
drafting  of  which  obviously  emanates  from  the  Minister  himself,  the 
rest  is  composed  of  tables  and  lists  interspersed  with  stereotyped 
phrases  trimmed  with  new  figures  by  the  different  bureaus. 

201 


THE  BUDGET 

Text  of  the  Fiscal  [Appropriation]  Bill 

The  "statement  of  supporting  arguments"  ends  with  the 
recommendation  that  the  budget  bill  be  passed,  the  text  of 
which  carries  the  following  title:  "Bill  Containing  the 
Budget  of  Expenditures  and  of  Revenues  for  the  Fiscal  Pe- 
riod .  .  r 

Let  us  stop  here  to  analyze  in  detail  the  Budget  [Appro- 
priation Bill]  itself. 

The  text  of  the  Fiscal  [Revenue  and  Appropriation]  Bill, 
constructed  as  all  bills  of  law,  is  composed  of  sections  and 
articles  [subsections].  The  sections  represent  the  main  divi- 
sions; these  contain  no  uniform  number  of  articles  [subsec- 
tions].^ For  several  years  the  Budget  [Revenue  and  Appro- 
priation] bills  have  been  divided  into  six  sections: 

Section  I.  Ordinary  Budget.^ 

Section  II.  Budget  ^  of  expenditures  to  be  charged  against 
extraordinary  resources. 

Section  III.  Budget  ^  of  expenditures  to  be  charged  against 
special  resources. 

Section  IV.  Annexed  Budgets  ^  attached  for  order  (pour 
ordre)  to  the  general  budget. 

^  The  number 'of  articles  varies  to  quite  an  extent,  according  to  the 
year.  The  budget  plan  for  1889  contained  79  articles;  the  budget 
plan  for  1890,  55;  the  budget  plan  for  1891,  72;  the  budget  plan  for 
1892,  44;  the  budget  plan  for  1897,  which  pretended  to  organize  a 
tax  on  the  lump  revenue  (revenu  global),  contained  119.  The  budget 
plan  for  1908  contained  83  and  the  budget  plan  for  191 3,  73. 

2  [In  this  relation  it  is  to  be  noted  that  the  word  ''budget"  is  here 
used  to  indicate  a  section  of  the  appropriation  bill  and,  after  this  is 
passed,  as  a  section  of  the  appropriation  act.  This  is  quite  contrary 
to  the  customary  usage.  According  to  the  English  practice  "The 
Budget"  is  the  document  which  is  submitted  by  the  Chancellor  of 
the  Exchequer  to  Parliament  some  time  in  April.  It  is  the  financial 
plan  for  the  fiscal  year  then  just  beginning.  It  is  essentially  a  docu- 
ment of  information  and  as  such  is  quite  separate  and  distinct  from 
both  the  "Estimates,"  which  are  laid  before  Parliament  early  in  the 
session  (usually  in  February),  and  from  the  "Appropriation  Bill," 
which  is  introduced  late  in  the  session  (usually  about  August).  The 
printed  Estimates  are  first  laid  before  Parliament;  then  they  are  ini- 
tially taken  up  in  the  committee  of  the  whole  house  sitting  as  a  "Com- 
mittee of  Supply."  After  six  weeks  or  two  months  the  "Budget"  is 
presented;  then,  after  the  "Committee  of  Supply"  and  the  "Commit- 
tee on  Ways  and  Means"  rise  and  report  the  "Appropriation  Bills," 
the  "Revenue  Bills"  are  introduced  and  passed.  Using  the  term 
"budget"  to  mean  any  or  all  four  of  these  separate  documents  or 
processes  is,  to  say  the  least,  very  confusing. — The  Editor.] 

202 


CONTENTS  OF  THE  [FRENCH]  BUDGET 

Section  V.  Special  activities  of  the  Treasury. 

Section  VI .     Means  of  operation  and  various  provisions. 

Since  the  aboHshing  of  budgets  on  '^extraordinary  re- 
sources," "special  resources"  and  "special  activities,"  the  fis- 
cal laws  have  contained  only  the  four  following  sections : 

Section  I.  General  Budget. 

Section  H.  Annexed  Budgets  attached  for  order  (pour 
ordre)  to  the  general  budget. 

Section  HI.     Special  provisions. 

Section  IV.  Means  of  operation  and  annual  provisions. 

Each  of  these  sections  now  in  use  will  be  separately  studied. 
Later  we  shall  return  to  the  subjects  of  sections  [now  omit- 
ted] used  in  times  gone  by. 


Section  I.     General  Budget    [General)  Appropriation 
AND  Revenue  Bills]  ^ 

The  ordinary  budget,  or  the  general  btidget,^  with  which  Provides 
section  we  first  deal,  contains  provisions  for  maintaining  the  or^^jj^^j. 
normal  activities  of  the  State.^    This  might  serve  as  its  defi-   Functions 


^  [Would  it  not  be  very  much  better  to  use  the  following  nomen- 
clature : 

"The  Estimates" — to  include  both  "estimates  of  expenditures"  and 
"estimates  of  revenue,"  which  are  prepared  by  the  several  serv- 
ices, reviewed  by  the  Minister  of  Finance,  printed  in  the  "book 
of  estimates"  and  laid  before  the  legislative  branch  for  critical 
examination,  inquiry  and  discussion. 
"The  Budget" — the  financial  plan  of  the  Ministry,  which  is  sub- 
mitted and  explained  by  the  officer  or  Prime  Minister  who  makes 
the  budget  speech. 
"The  Appropriation  Bill" — the  formal  project  of  law  laid  before  the 
legislative  branch  for  enactment,  and  the  "Act  of  Appropriation" 
the  formal  legislative  authorization  for  expenditures. 
"Revenue  Bills"  and  "Borrowing  Authorizations,"  with  appropriate 
titles  for  corresponding  "acts,"  such  as  the  "Food  Act  of  19 — " 

or  the  "War  Loan  Act  of " 

There  is  endless  confusion  resulting  from  using  the  word  budget  to 
mean  any  one  or  all  of  these  things ;  and  here  it  is  used  by  the  author 
to  mean  a  section  of  the  Appropriation  "Bill"  or  "Act." — The  Editor.] 
2  It  was  the  budget  bill  for  1892  which,  for  the  first  time,  substi- 
tuted the  name  of  "General  Budget"  for  the  name  of  "Ordinary 
Budget." 

^  The  decree  of  May  31,  1862,  furnished  no  definition  of  any  of 
the  budgets,  neither  the  ordinary,  extraordinary,  special  resources  or 


203 


THE  BUDGET 

nition.  Strictly  speaking,  there  should  be  only  a  general 
budget;  it  does  not  seem  logical  that  the  State  should  exer- 
cise other  than  normal  functions.  Many  countries,  in  fact, 
have  but  one  budget,  and  it  will  be  easy  to  show  that  in  France 
the  extraordinary  budgets,  the  annexed  budgets  and  the 
budgets  of  special  resources  are,  or  have  been,  quite  unnec- 
essary. 

But,  it  may  be  objected,  is  it  possible  to  determine  exactly 
the  list  of  functions  belonging  to  the  normal  activities  of  the 
State?  Fortunately  the  question  does  not  present  itself  in 
this  way,  for  it  would  be  impossible  to  answer,  as  there  is  no 
formula  which  would  make  it  possible  in  a  few  words  to 
settle  the  controversy.^  It  is  enough  to  say  simply  that  only 
those  activities  which  the  framers  of  the  budget  themselves 
consider  as  qualified  to  be  included  among  the  normal  func- 
tions of  the  State  should  be  entered  in  the  general  budget. 

This  is  undoubtedly  the  idea  of  the  French  legislator. 
When,  in  1862,  the  extraordinary  budget  was  separated  from 
the  ordinary  budget,  the  deputy  who  reported  for  the  Com- 
mission of  the  Chamber  of  Deputies  defined  the  ordinary 
budget  as  follows: 

Definition  "The  appropriations  of  the  ordinary  budget,"  he  said, 

"will  provide  for  the  obligatory  and  permanent  under- 
takings, insure  the  payment  of  the  debt,  provide  for  the 
carrying  out  of  the  laws,  the  administration  of  justice, 
the  collection  of  revenues,  the  defense  of  the  territory." 
(Report  relating  to  the  budget  for  1863,  June  3,  1862.) 

The  phrase,  "obligatory  and  permanent  undertakings," 
used  in  the  report  of  1862,  and  frequently  repeated  since,  is 
almost  synonymous  with   "normal  activities  of  the  State," 

annexed  budgets.  Under  the  circumstances  the  definitions  would  not 
only  possess  an  academic  interest,  but  they  would  permit  the  method- 
ical classification  of  each  budgetary  operation,  and  assign  it  to 
its  proper  category.  See  what  we  have  written  on  this  subject  in 
Veconomiste  frangais  of  December  10,  1881.  The  new  rules  of  ac- 
counting, which  are  in  the  course  of  preparation,  will  some  day  un- 
(Joubtedly  fill  this  gap. 

*  M.  Paul  Leroy-Beaulieu  has  devoted  a  large  and  excellent  vol- 
ume, which  everybody  has  read,  under  the  title  Uetat  moderne  et  ses 
fonctions,  in  order  to  determine  the  real  attributes  of  the  State,  taking 
into  consideration  the  various  times  and  circumstances  in  which  every 
nation  has  found  itself. 

204 


CONTENTS  OF  THE  [FRENCH]  BUDGET 

which  phrase,  however,  has  the  merit  of  expressing  a  more 
theoretical  idea.  We  can,  therefore,  adopt  the  following  defi- 
nition :  *'The  general  budget  provides  for  the  carrying  on  of 
services  which  are  among  the  normal  functions  of  the  State."  ^ 


Precedence   of   Expenditures   over   Revenues   in   the 
General  Budget 

The  general,  or  ordinary  budget,  was  previously  divided 
into  two  sections :  One  devoted  to  expenditures  and  the  other 
to  revenues.  Since  1889  all  the  subjects  of  the  ordinary 
budget  have  been  included  in  a  single  section;  subsections, 
however,  continue  to  separate  the  expenditures  from  the  reve- 
nues and  now,  as  always,  the  expenditures  precede  the  reve- 
nues. 

This  precedence  of  expenditures  constitutes  an  essential 
principle  of  public  accounting  and  it  is  necessary  to  search 
out  the  reason.  Why  does  the  State  begin  by  estimating 
its  expenditures,  while  all  private  individuals  follow  the  re- 
verse order?  The  father  of  a  family  first  sums  up  his  reve- 
nues, and  then  decides  as  to  their  application.  The  State 
could  calculate  in  the  same  way,  if  it  still  lived  on  the  pro- 
ceeds of  its  own  domains.  But  for  a  long  time  the  domains, 
particularly  in  France,  have  furnished  only  a  small  part  of 
the  budget  [revenues] ;  taxes  almost  exclusively  supply  the 
budget  with  funds.  The  taxes  do  not  yield  an  invariable 
spontaneous  sum  anticipated  in  advance;  they  produce  what 
is  demanded  within  the  limits  of  the  taxpaying  ability  of  the 
citizens.  The  State  takes  its  money  from  the  pockets  of 
the  people,  which  is  not  the  case,  or,  at  least,  is  not  cus- 
tomary with  individuals.  This  prerogative,  therefore,  im- 
poses upon  the  State  the  obligation  to  determine  the  amount 
needed  in  order  to  estimate  the  sacrifices  which  the  State 
will  have  to  demand  of  the  taxpayers.  "The  expenditures 
to  be  made  serve  as  a  measure  and  a  justification  for  reve- 
nues," said  M.  Passy,  Minister  of  Finance,  in  the  National 
Assembly  in  January,  1849,  repeating  what  the  Constitu- 
tional  Assembly   had   proclaimed   in    1790. 

In  this  session,  January  31,  1849,  the  question  which  occupies 


Reverse 
Procedure 
to   That 
Followed 
by   Indi- 
viduals 


Necessity 
for    De- 
termining 
Needs 
First 


^  We  purposely  endeavor  to  eliminate  as  many  words  as  possible 
from  definitions  of  our  own  making,  in  order  to  avoid  dangers  in- 
separable from  prolixity. 

205 


THE  BUDGET 

Argument       US  was  exhaustively  discussed.     The  opponents  of  the  prin- 
in  Favor  of    ciple   formulated  by  the  Minister  of   Finance  set  forth  the 
ing"he*""       following  arguments:     *T  demand,''  said  M.  Billaut,  "I  de- 
Possible  mand  particularly  that  the  question  of  the  maximum  possible 
Revenue         revenue  be  submitted  to  the  Assembly  and  to  the  Government, 
so  that  this  limit  shall  make  its  official  and  necessary  weight 
felt   in   the   deliberations   relating   to   expenditures."      Thus, 
the  members  of  the  Opposition  in  1849  affirmed  that  there  is 
a  maximum  limit  of  taxation  and  that  this  limit  had  been 
reached  at  that  time  and  even  exceeded.     According  to  their 
contentions,  it  was  necessary  to  study  the  budget  of  reve- 
nues first,   from  this  point  of  view,  and,  as  soon  as  it  was 
brought  to  its  proper  level,  the  ministers  would  be  forced  to 
economize  in  order  to  maintain  the  equilibrium  of  the  budget. 
'The  Minister  of  Finance  shall  have  charge  of  making  the 
budget  of  expenditures  agree  with  the  budget  of  revenues." 
This  was  the  title  of  the  amendment  supported  by  Messrs. 
Billaut  and  Stourm,^  and  opposed  by  M.  Passy. 

This  theory,  rather  political  than  financial,  was  based  on 
an  erroneous  idea.  The  course  of  the  financial  history  of 
France  has  proven  that  the  1,500,000,000  franc  budget  of 
1849  ^id  not  constitute  an  impassable  barrier.  From  the  mo- 
ment the  taxes  fail  to  yield  the  amount  needed,  it  becomes^ 
necessary  to  look  beyond;  which  means  that  the  need  for 
expenditures  is  the  only  thing  that  fixes  the  limit.  The  State 
first  determines  its  needs ;  the  taxpayers  will  pay  for  them  sub- 
sequently. Even  in  Prussia,  where  the  revenues  are  presented 
first,  and  in  Belgium,  where  the  revenues  are  voted  on  first, 
the  expenditures  have  precedence  in  the  minds  of  those  who 
prepare  the  budget;  this  precedence,  although  conforming  to 
the  requirements  of  logic,  is  dangerous. 

^  The  Opposition  demanded  that  economies  be  made  in  the  sum  of 
140,000,000  in  the  Department  of  War;  32,000,000  in  the  Department 
of  the  Navy;  and  50,000,000  in  the  Department  of  Public  Works.  The 
Opposition  insisted  that  these  economies  be  made  by  the  ministries 
themselves  and  not  by  the  Chamber,  w^hich  is  deprived  of  every  com- 
petence as  to  the  details,  and  which,  moreover,  could  only  give  orders 
which  would  be  reluctantly  carried  out.  The  previous  reduction  of 
the  budget  of  revenues  should  have  compelled  the  ministers  to  make 
the  demanded  reductions  of  expenditures  in  their  respective  depart- 
ments. 


206 


CONTENTS  OF  THE  [FRENCH]  BUDGET 


Details    of    Expenditures    Entered   in    the   Ordinary 

Budget 

In  conformity  with  this  theory,  the  first  article  of  section 
I,  General  Budget,  bears  the  heading :  Open  Appropriations. 
Its  first  article  reads :  "Appropriations  are  open  to  Minis- 
ters for  expenditures  under  the  general  budget  for  the  fiscal 
period  19 — ,  in  conformity  with  schedule  A,  annexed  to  this 
law." 

Let  us  comment  on  this  sacrosanct  text.  Every  [estimate 
for]  expenditure  emanates  from  one  of  the  ministers.  To 
be  a  minister  means,  more  or  less,  to  be  the  one  who  deter- 
mines the  amount  of  disbursements.  The  function  of  each 
minister,  therefore,  is  determined  by  the  annexed  schedule  A, 
to  which  the  first  article  [general  budget]  relates;  this  an- 
nexed schedule  contains  a  considerable  number  of  figures, 
each  grouping  of  which  composes  a  ministry  with  subdivisions, 
called  chapters. 

To  present  them  by  ministry  and  by  chapter  is  the  required 
form  for  the  budget  of  expenditures,  adopted  to  conform  to 
the  votes  of  the  legislature,  as  will  be  explained  more  fully 
in  Chapter  XIII.  In  this  consists  the  importance  of  sched- 
ule A.i 

Besides  schedule  A,  to  which  Article  i  refers,  the  details   Principal 
are  recapitulated  to  show  the  totals  of  budgetary  expendi-   g^^s^Vf"  Or- 
tures  in  the  second  paragraph.     This  statistical  recapitulation    dinary  Ex- 
contains  the  following  five  main  headings :     ( i )  public  debt ;   penditures 
(2)  public  authorities  [overhead  expenses];  (3)  general  [de- 
partmental] activities  of  ministries;  (4)  costs  of  administer- 
ing, levying  and  collecting  taxes  and  public  revenues;    (5) 
reimbursements,      restitutions,     uncollectable     taxes      (non- 
valeiirs)  and  premiums.     The  detailed  figures  of  these  statis- 
tics,^  according   to   the   budget    for    191 3,   are   given   later, 
together  with  comments  thereon. 

^  Schedule  A,  which  contains  a  list  of  all  the  expenditures  of  the 
general  budget  by  ministries  and  by  chapters  to  which,  during  the 
several  months,  the  debates  and  legislative  votes  will  refer,  possesses 
not  only  great  importance,  but  also  great  size.  Almost  a  thousand 
headings  and  figures  are  written  on  its  31  pages. 

2  The  appropriations  are  applied  as  follows : 

1.  To  the  Public  Debt  to  the  amount  of  1,290,418,000  francs 

2.  To  the  Public  Authorities  to  the  amount  of  19,973,000       " 

3.  To  the  General  Services  of  the  Ministries        2,684,434,000       " 

207 


THE  BUDGET 


Provisions 
for  Meet- 
ing Public 
Debt 


Cost   of 
Regular 
Departmen- 
tal Activi- 
ties 


Cost  of  Col- 
lecting Rev- 
enues 


Reimburse- 
ment of 
Over  and 
Double 
Payments 


The  total  of  the  public  debt,  amounting  to  i,290,5oo,cxx) 
francs,  includes  three  heads:  (i)  the  perpetual,  consolidated 
debt,  which,  since  the  last  conversions,  is  composed  only  of 
3  per  cent  bonds;  (2)  the  debt  reimbursable  on  a  fixed  date, 
or  by  serial  bonds,  which  is  composed  of  amortizable  bonds, 
short-term  obligations,  subsidies  to  various  sc^ieties,  railroad 
companies,  interest  on  the  floating  debt,  etc.;  (3)  finally,  the 
public  service  debt,  the  most  of  which  is  made  up  of  pensions, 
civil  and  military. 

The  2,684,000,000  francs  for  the  general  [departmental] 
activities  of  the  ministries  represent  the  operation  of  the  heavy 
machinery  of  the  State;  the  other  divisions  relate  to  main- 
tenance, and  to  the  expenditures  of  the  past.  Only  a  little 
over  half  the  budget  works  efficiently.  These  2,684,000,000 
francs  have,  in  fact,  the  purpose  only  of  paying  the  expendi- 
tures of  the  ministries  of  War,  of  the  Navy,  of  Public  Instruc- 
tion, of  Justice,  of  Public  Works,  of  Foreign  Aflfairs,  etc., 
in  a  word,  all  the  expenditures  of  what  are  called,  .properly 
or  otherwise,  the  normal  activities  of  the  State. 

The  621,000,000  francs,  costs  of  administering  the  col- 
lection of  taxes,  are  only  expenditures  for  maintenance. 
Taxes  do  not  come  in  of  themselves ;  in  order  to  collect  them 
from  the  taxpayers  and  to  put  them  in  the  Treasury,  certain 
efforts  are  necessary,  the  cost  of  which,  in  personnel  and 
material,  amounts  each  year  to  almost  14  per  cent  of  the  col- 
lected proceeds.^ 

Reimbursements,  restitutions,  uncoUectable  taxes  {non- 
valeurs)  and  premiums  represent  routine  expenditures,  de- 
ductions from  the  collections.  Certain  indirect  taxes,  in  case 
they  were  unduly  collected,  are  returned  in  full  to  the  in- 
jured party,  either  voluntarily  or  through  a  judgment  of  the 
court.     In  case  certain  items  are  uncoUectable,.  through  no 


4.  To  the  costs  of  administration,  collection  and 

application  of  taxes  and  public  revenues 

5.  To    reimbursements,    restitutions    and    non- 

valeurs 


621,977,000  francs 
47,836,000      " 


General  total  in  conformity  with  the  total  of 
schedule  A  annexed  to  the  present  law        4,664,640,000  francs 
(Text  of  the  second  paragraph  of  the  first  article  of  the  budget  plan 
for  191 3.)     The  figures  of  the  text  for  the  last  portion  are  replaced 
by  zeros. 

^  Including  the  purchases  of  raw  materials  intended  for  the  monopo- 
lies. 

208 


CONTENTS  OF  THE  [FRENCH]  BUDGET 

fault  of  the  collectors,  the  Treasury  stands  the  deduction.  In 
case  certain  products  on  which  taxes  were  collected  are  ex- 
ported, the  amount  is  returned  to  the  exporters  by  means  of 
a  rebate.  With  regard  to  other  products,  the  fact  of  their 
leaving  the  State  causes  the  payment  of  a  premium.  Fur- 
thermore, the  State  refunds  to  certain  interested  parties  the 
collections  made  for  their  accoimt.^ 

Finally,  19,000,000  francs  go  to  high  public  authorities — ' 
salaries  and  annuities  of  the  President  of  the  Republic,  sena- 
tors, deputies,  etc.  In  this  item  the  Republic  effects  an 
economy  by  not  paying  the  Civil  List. 

These  five  statistical  divisions,  inserted  at  the  end  of  the 
first  article  [the  General  Budget],  make  up  a  total  of  4,664,- 
000,000  francs,  of  which  schedule  A  furnishes  the  details,  ar- 
ranged by  ministry  and  by  chapters. 

Two  principal  footings  stand  out  conspicuously  in  this  sum- 
mary: the  total  of  the  public  debt;  and  the  figure  for  general 
[departmental]  activities  of  the  ministries,  amounting  alto- 
gether to  3,974,000,000  in  a  budget  of  4,664,000,000. 


Details  of  Revenues  Entered  in  the  General  Budget 

Taking  up  the  subject  of  revenues  in  the  General  Budget, 
we  notice  at  first  glance  the  absence  of  direct  taxes,^  which, 
not  being  able  to  wait  for  the  vote  on  the  fiscal  law,  are 
passed  in  advance.  Before  the  fiscal  year  opens,  a  long  delay  Levy  of  Di- 
is  necessary  in  order  to  give  time  to  the  conseils  generaux  et  "*^'  Taxes 
d'arrondissement  to  assess  and  equalize  their  quotas  and  give 
to  the  agents  of  direct  taxes  time  to  make  out  the  assessment 
rolls ;  this  requires  from  four  to  five  months.  In  July,  there- 
fore, the  legislature  finds  itself  compelled  to  let  the  direct 
taxes  take  an  isolated  course.  This  is  done  by  a  special  law, 
which  is  detached  from  the  general  plan.^ 

^  As  far  as  the  fines  and  confiscations  are  concerned,  for  example, 
which  the  Treasury  collects  in  total,  a  portion  is  restituted  to  the  offi- 
cials who  drew  up  the  minutes,  while  another  part  is  eventually 
turned  over  to  the  informers  who  have  betrayed  the  fraud;  still  an- 
other part  is  turned  over  to  the  pension  fund. 

2  In  1889  and  in  1893  the  direct  taxes  were  exceptionally  entered 
in  the  general  budget  itself  because  the  budgets  for  1890  and  1894 
were  voted  on  in  the  month  of  July  and  the  deputies  were  in  a  hurry 
to  return  to  their  respective  electoral  districts  for  the  general  elec- 
tions. 

3  For  a  long  time  the  Minister  of  Finances,  not  wanting  to  bring 

209 


THE  BUDGET 


Authority 
to  Collect 
Separate 
from  I^evy 


This  segregation  is  objectionable  because  it  cuts  the  budget 
in  two  and  destroys  its  unity.  Thus,  in  1890,  the  law  on 
direct  taxes  having  announced  a  reduction  in  the  real  estate 
tax,  it  became  necessary  to  specify  that  the  loss  resulting  from 
this  reduction  would  be  made  up  by  revenues  to  be  determined 
when  the  second  part  of  the  fiscal  law  came  under  considera- 
tion. The  same  situation  arose  in  1898,  when  a  reduction  of 
the  small  real  estate  quota  was  proposed.  Owing  to  this 
segregation,  there  are,  therefore,  two  fiscal  laws.^  Let  us 
note  this  article  of  the  law  on  direct  taxes : 


"The  assessment  rolls,  prepared  in  conformity  with 
the  present  law,  shall  not  be  approved  and  executed  by 
the  prefect  and  shall  not  be  collected  until  the  law  deter- 
mining the  revenues  for  the  fiscal  period  .  .  .  shall  have 
authorized  their  collection."  ^ 

about  a  possibility  of  a  delay  on  the  part  of  the  Chambers,  continued 
to  include  the  direct  taxes  in  his  general  budget  plan,  leaving  it  by 
deference  to  the  Commission  on  Budget  to  separate  the  direct  taxes 
from  the  budget.  Later,  when  the  certainty  of  delays  became  evi- 
dent, the  Minister  of  Finance  decided  to  draw  from  the  beginning 
two  distinct  plans.  Finally,  since  1906,  the  direct  taxes  have  again 
been  entered  in  the  general  budget,  from  which  they  are  extracted 
for  the  purpose  of  forming  a  special  plan. 

1  "It  is  to  be  regretted  that  the  law  on  direct  taxes  had  to  be  de- 
tached from  the  general  budget.  Your  Commissions  on  finance  have 
at  all  times  emphasized  the  inconveniences  of  such  a  procedure." 
(Report  of  M.  Boulanger  in  the  Senate,  July  30,  1890.) 

2  This  article  was  inserted  for  the  first  time  in  the  law  on  direct 
taxes  in  1889.  "The  preliminary  vote  on  direct  taxes,"  said  the  Sena- 
tor reporting  to  the  Commission  on  Finances  of  the  Senate,  "is  neces- 
sitated only  by  the  need  that  the  Assemblies  of  the  departemcnts 
should  establish  bases  for  the  distribution  and  should  know  the  num- 
ber of  the  centimes  additionnels  before  the  end  of  the  year.  It  suf- 
fices, therefore,  to  limit  the  special  law  to  this  subject.  It  is  useless 
and  also  dangerous  to  extend  this  law  to  the  collection  of  the  tax. 
The  right  to  collect  the  tax  should  be  reserved  for  the  vote  on  the 
general  financial  law  of  which  this  right  is  an  essential  element." 
(Report  of  M.  Ernest  Boulanger,  July  11,  1888.)  Leon  Say  in  1878 
inaugurated  a  new  wording  in  the  law  itself  on  direct  taxes;  this 
new  wording  he  justified  as  follows:  "At  the  time  I  was  Minister, 
in  1878,  I  asked  the  legislature  to  introduce  a  change  in  the  text  of 
the  laws  on  direct  taxes.  Until  then  that  kind  of  law  was  so  worded 
that  the  direct  taxes  shall  be  'collected'  according  to  bases  which 
have  been  already  established.  ...  I  have  asked  that  instead  of  put- 
ting the  words  'collected'  there  should  be  put  the  word  'assessed,' 
which  would  mean  that  the  authorization  preceding  the  general  vote 
on  the  budget  should  be  given  only  to  the  establishing  ^nd  not  to 

210 


CONTENTS  OF  THE  [FRENCH]  BUDGET 


Thus  the  first  law  is  attached  to  the  second,  without,  how- 
ever, eliminating  this  duality.  Generally  speaking,  under  the 
budget  law  revenues  require  authorization  and  estimating. 

The  fiscal  bill  [act]  grants,  first,  the  following  authoriza- 
tion to  collect  taxes :  'Tn  conformity  with  existing  laws,  the 
collection  of  various  dues,  proceeds  and  revenues  enumerated 
in  schedule  F  annexed  to  this  law  shall  be  continued  for  191 3." 
The  annexed  schedule  to  which  the  article  in  question  of  the 
fiscal  law  refers,  gives,  by  name,  without  adding  any  figure, 
the  list  of  all  the  revenues  to  be  collected  for  the  benefit  of 
the  State,  and  with  each  the  date  of  the  laws  under  which 
these  revenues  were  originally  authorized.^  Thus,  every  kind 
of  revenue  is  submitted  to  a  vote  of  the  legislature  [each 
year]  in  order  to  affirm  the  right  of  the  representatives  of 
the  country  to  pass  on  the  taxes.  All  collections,  other  than 
those  which  are  thus  sanctioned,  are  illegal. 

Estimating  [the  amount  which  the  revenues  will  yield]  fol- 
lows the  authorization  to  make  collections;  we  have  insisted 
on  exact  estimates,  so  that  that  necessity  becomes  immedi- 
ately manifest.  The  following  article  adds:  "The  ways  and 
means  applicable  to  the  expenditures  of  the  general  budget 
for  the  fiscal  period  191 3  are  estimated  at  4,665,108,000 
francs,  distributed  as  follows." 

In  order  to  carry  out  the  announced  distribution,  other  an- 
nexed schedules  take  up  the  list  of  public  revenues,  providing 
them  with  individual  estimates.  To  each  item  of  revenues 
is  added  a  figure,  and  the  total  of  these  figures  makes  the 
4,665,108,000  francs  mentioned  above. 

The  revenues  in  these  tables  of  estimates  are  classified  as 
follows :  ^ 

1.  Direct  taxes.^ 

2.  Indirect  taxes.^ 

the  collecting  of  the  direct  tax."     (Speech  of  Senator  Leon  Say, 
December  27,  1887.) 

1  Since  the  aforesaid  schedule  must  sum  up  various  direct  taxes, 
the  total  number  of  authorized  taxes  amounts  to  almost  190. 

2  This  classification  of  revenues  was  inaugurated  in  1886  in  the 
budget  plan  for  1887,  which  was  presented  by  M.  Carnot,  Minister 
of  Finance,  with  the  cooperation  of  M.  Chevrey-Rameau,  then  chief 
of  the  cabinet  of  the  Minister,  later  Director  General  of  Public  Ac- 
counting, who,  unfortunately  for  his  friends  and  the  Administration, 
died  prematurely. 

3  The  direct  and  indirect  taxes  are  combined  at  present  under  a 
single  head  which  has  the  following  title :    Taxes  and  revenues;  thus, 

211 


Cannot  Col- 
lect Till 
After  Bud- 
get Passes 


Estimates 
of  Amount 
to  Be  Real- 
ized Fol- 
lows Au- 
thorization 


Classifica- 
tion of  Es- 
timates 


THE  BUDGET 


Direct 
Taxes 


Indirect 
Taxes 


Proceeds   of 
Monopolies 


Proceeds 
and  Rev- 
enues of 
State  Do- 
mains 


3.  Proceeds  of  monopolies  and  industrial  pursuits  of  the 

State.  ' 

4.  Proceeds  and  revenues  from  the  domains  of  the  State. 

5.  Various  proceeds  of  the  budget. 

6.  Exceptional  resources. 

7.  Routine  revenues. 

Direct  taxes  head  the  list ;  the  figures  given  are  those  of  the 
special  law  bill  which  are  restated.  They  include  the  assessed 
taxes  (real  estate,  door  and  window  tax,  personal  and  prop- 
erty tax),  proportionate  taxes  (house  and  trade  licenses), 
and  taxes  similar  to  direct  taxes  (mortmain,  mines,  billiards, 
clubs,  carriages,  horses,  etc.).  Their  proceeds,  estimated  at 
616,173,000  francs  in  19 13,  belong  exclusively  to  the  general 
fund  applicable  to  the  needs  of  the  State.  The  centimes  addi- 
tionnels  allotted  to  the  departements  and  to  municipalities, 
amounting  to  from  516,000,000  to  517,000,000  francs,  are 
not  included;  they  were  formerly  shown  in  the  budget  of 
special  resources. 

The  indirect  taxes  and  revenues  represent  2,677,000,000 
francs,  or,  in  other  words,  four  times  the  amount  of  direct 
taxes.  Their  collection  is  entrusted  to  three  large  fiscal  ad- 
ministrations, viz. :  the  Department  of  Registration  and 
Stamps,  the  Department  of  Customs  and  the  Department  of 
Indirect  Taxes. 

*'The  proceeds  of  monopolies  and  industrial  pursuits'*  were 
separated,  for  the  first  time,  in  1887  from  the  indirect  reve- 
nues, because  "they  did  not  possess  the  character  of  taxes 
and  because  they  represented  the  value  of  goods  delivered  or 
the  price  of  a  service  performed."  (Statement  of  supporting 
arguments  of  March  16,  1886.)  The  goods  in  question  are: 
tobacco,  gunpowder,  matches.  The  services  rendered  are: 
transportation  of  mails  and  printed  matter,  telegraphs,  etc. 
Their  gross  proceeds  were  more  than  975,000,000  francs. 

The  proceeds  and  revenues  from  the  domains  of  the  State 
total  only  68,105,000  francs.  Of  this  sum  the  proceeds  and 
revenues  from  forests  amount  to  34,000,000  francs.  The 
balance  results  from  the  sales  of  furniture,  from  the  escheat- 
ing of  estates,  sales  of  immovables,  etc. 

Under  the  heading  "various   proceeds  of   the  budget" — 

the  present  budgets  contain  only  six  subdivisions  of  the  budget  of 
revenues.  We  preserve,  however,  the  subdivision  into  direct  and  indi- 
rect taxes,  because  it  facilitates  explanations. 

212 


CONTENTS  OF  THE  [FRENCH]  BUDGET 

amounting  to  68,178,000  francs — are  grouped  revenues  of  no   Various 
special  classification,  such  as  proceeds  of  the  tax  on  patents,   Proceeds  of 
profits  made  by  the  Caisse  des  Depots  et  Consignations,  the  ^^^  Budget 
income  from  convict  labor,  the  reimbursement  of  expendi- 
tures for  control  and  supervision  over  railroads,  the  proceeds 
from  sales  of  Government  publications,  the  income  from  the 
sale  of  the  insignia  of  the  Order  of  Merite  agricole,  the  re- 
imbursement of  advances  to  neighborhood  roads  and  educa- 
tional establishments,  etc.     Under  this  heading  are  entered 
all  the  revenues  escaping  the  avidity  of  the  ministries;  this  is 
done  by  virtue  of  the  principle  of  comprehensiveness  treated 
in  Chapter  VI. 

The  exceptional  resources  vary.     In  1890  they  did  not  ex-   Exceptional 
ceed  767,000  francs;  in  1891   they  increased  to  27,175,000  Resources 
through  taking  into  the  budget  certain  balances  of  loans.     In 
1892  there  was  an  item  of  11,450,000  francs,  resulting  from 
the  liquidation  of  the  Army  endowment  fund.     In  1896,  a 
total  of  37,500,000  francs  came  from  the  minting  of  silver, 
taking  advantage  of  the  legal  limitation  on  accounts  in  the 
Caisse  des  Depots  et  Consignations,  etc.    In  1897  no  amount  is 
given  under  this  heading;  the  same  is  true  in  1900.     In  1906 
33,480,000  francs  are  shown  from  balances  of  loans  and  sales 
of  bonds.     In  1908  an  issue  of  56,500,000  francs  of  short- 
term  obligations  was  entered  as  exceptional  resources  in  order 
to  balance  the  budget.     In  1909  there  were  only  3,000,000. 
In    19 1 3    161,000,000    were    deducted    from    the    notorious  Routine 
provisional  account    {compte  proi/isionnel) ,   which   was  or-   Revenues— 
ganized  in  19 12.    Finally,  the  routine  revenues,  amounting  to   From*^E°xT 
9^)550,000  francs,  form  the  last  paragraph  inaugurated  like  -  penses 
the  preceding  one,  by  the  budget  plan  for  1887.     According 
to  whether  they  meet  these  expenditures  in  total  or  partially, 
they  have  different  names.  ^ 

The  routine  revenues,  which  only  partially  meet  "the  ex-  Those  Gov 
penditures,  are  called  revenues  for  the  reduction  of  expenses   ^rning  Ex- 
(recettes  en  attenuation  de  de penses).    The  statement  of  sup-  Pan^^  *" 
porting  arguments  on  the  budget  for  1887  defined  them  as 
follows:     ^'Revenues   having  a   character  related   to   corre- 
sponding expenditures,  which  must  be  entered  in  the  budget 
at  a  net  figure  after  the  quota  of  revenues  intended  for  the 
offsetting  of  these  expenditures  has  been  deducted."    Among 
others,  may  be  cited  as  an  example,  the  deductions   {stop- 
pages) for  pensions  of  civil  employees,  amounting  to  38,000,- 
000  francs,  which  partially  ofifset  117,310,000  francs  of  ex- 

*  213 


THE  BUDGET 

penditures  relating  to  the  same  subject,  and  carried  as  a  part 
of  the  Hfe  debt.     The  same  holds  true  of  the  reserves  for  the 
salaries  of  army  officers,  maintenance  fees  of  pupils  in  gov- 
ernment schools,   the   receipts   for  meeting  expenses  of  the 
floating  debt,   the  proceeds   from  universities,   the   proceeds 
from  penalties  and  fines,  etc.,  which  partly  offset  the  corre- 
sponding appropriations.^ 
Those  Com-        As  far  as  routine  revenues  are  concerned,  which  balance 
pletely  Off-     j^q^  partially  but  wholly  the  corresponding  expenditures,  they 
penditures"      ^^^  called  routine  expenditures  proper. 

These  are  "revenues  which  offset  the  corresponding  ex- 
penditures exactly,  and  which  being  of  indirect  interest 
only  to  the  finances  of  the  State,  might  be  eliminated  from 
the  budget  without  altering  its  equilibrium."  ^  (State- 
ment of  supporting  arguments  of  March  17,  1886.) 

The  same  is  true  of  the  3,512,000  francs  of  expenditures 
for  the  Guard  of  Paris,  which  sum  is  repaid  in  total  by  the 
City.  Similarly  the  various  expenditures  for  the  Department 
of  Justice,  for  the  Gendarmerie,  etc.,  are  reimbursed  to 
France  by  the  Government  of  the  Bey ;  the  same  is  also  true 
with  regard  to  funds  de  concours,  etc.  The  statement  of 
supporting  arguments  on  the  budget  of  1887  reads  as  fol- 
lows : 

"These  revenues  are  entered  in  the  budget  simply  be- 
cause of  the  rule  (Article  16,  of  the  Decree  of  May  31, 
1862),  which  prescribes  that  the  total  amount  of  all  the 
proceeds  shall  be  entered  as  revenues,  and  all  the  costs 
of  collection,  administration  and  of  other  accessory  dis- 
bursements be  entered  as  expenditures." 

In  this  connection  we  find  the  principle  of  universality 
(comprehensiveness),  explained  in  Chapter  VI,  put  in  prac- 
tice. 

1  The  comments  on  the  budget  should,  for  every  one  of  the  reduced 
revenues,  indicate  in  a  footnote  the  total  of  the  corresponding  ex- 
penditure in  order  to  emphasize  the  net  balance  which  the  reader  at 
times  has  difficulty  in  discovering  himself. 

2  The  comments  on  the  budget  for  every  one  of  the  reduced  reve- 
nues should  indicate  in  a  footnote  the  total  of  the  corresponding  ex- 
penditures in  order  to  emphasize  the  net  balance  which  the  reader 
at  times  has  difficulty  in  discovering. 

214- 


CONTENTS  OF  THE  [FRENCH]  BUDGET 


The  above  provisions  constitute  the  essential  and  perma- 
nent skeleton  of  the  plan  for  the  budget  of  revenues.  The 
budget  law,  however,  includes  in  the  section  under  the  head- 
ing. Authorised  Taxes  and  Revenues,  numerous  articles  re- 
lating to  imposition  and  reduction  of  taxes.  Suggestions  of 
this  kind,  which  change  each  year  and  are  exceptional,  can- 
not possibly  be  analyzed  in  this  connection.^  We  must,  how- 
ever, avail  ourselves  of  the  opportunity  to  question  the  ex- 
pediency of  their  being  included  in  the  budget.  Evidently > 
the  inserting  in  the  fiscal  law  of  certain  fiscal  collections  of 
an  administrative  and  secondary  nature  gives  no  ground  for 
objection.  Fundamental  reforms,  however,  and  the  estab- 
lishment of  new  systems  should  always  be  based  on  special 
laws.  The  budget  law,  in  fact,  has  no  other  mission  than 
to  ^'authorize"  the  collection  of  revenues  of  the  future  fiscal 
period  and  to  "estimate"  their  proceeds  in  conformity  with 
existing  organic  laws,  the  dates  of  which  the  fiscal  law  gives 
specifically  in  its  annexed  schedules.  The  installation  of 
changes  and  the  imposing  of  taxes  of  any  importance  in  the 
codes,  therefore,  rest  with  the  organic  laws,  for,  after  these 
laws  have  once  been  passed,  the  budget  has  only  to  receive  its 
annual  exequatur.  In  a  word,  the  fiscal  law  is  an  ''annual 
law,"  and  should  make  no  stipulations  beyond  the  limits  of 
one  year. 

Additional  reasons  make  the  strict  application  of  this  rule 
desirable;  these  reasons  are  founded  on  the  routine  of  legis- 
lative work  proper  and  on  the  necessity  of  voting  the  budget 
without  delay.  Thus,  of  late  years,  even  as  late  as  1908,  we 
have  seen  the  Chambers — after  having  attempted  to  intro- 
duce in  the  budget  great  fiscal  and  other  reforms — finish  the 
work  only  to  be  ''dissolved,"  worn  out  by  the  struggle,  much 
to  the  benefit  of  the  fiscal  law. 

Recapitulating,  the  ordinary  budget — when  considered 
from  the  point  of  view  of  its  structure  and  now  called  the 
general  budget — appears  to  be  very  simple :  In  this  budget 
the  expenditures  are  presented  first  and  are  arranged  by  min- 

^  This  observation  applies  to  several  budgets  of  the  last  few  years, 
particularly,  however,  to  the  plan  for  1897,  which  in  78  articles  con- 
tained a  complete  outline  of  fiscal  reorganization  together  with  the 
creation  of  the  lump  tax  on  the  revenue;  it  applies  also  to  the  fiscal 
law  of  February  26,  1901,  which  in  19  articles  changes  the  very  basis 
of  the  laws  on  inheritance  and  transfers,  and  also  to  the  law  of  March 
31,  1903,  which  in  18  articles  installs  a  new  system  relating  to  alcohol, 
etc. 

2«5 


Question    as 
to    Whether 
These 
Should  Be 
in  Budget 


Recapitula- 
tion of 
Comment  on 
the  General 
Budget 


THE  BUDGET 

istries  and  by  chapters;  moreover,  the  commentators,  and  not 
those  who  prepared  the  budget,  make  the  distinction  between 
the  estimated  appropriations  and  the  Hmited  appropriations. 
The  revenues  are  first  authorized,  then  estimated  according 
to  different  systems,  the  most  perfect  of  which  seems  to  be 
that  of  direct  valuation,  in  those  countries  which  can  adopt 
such  a  system.  Finally,  the  bringing  together  of  the  reve- 
nues with  the  expenditures,  results  in  what  is  called  the  equili- 
brium of  the  budget. 


Contents  of 
the    An- 
nexed Bud- 
gets 


Each  State 
Enterprise 
Has  its 
Separate 
Budget 


Section  II   [of  the  Appropriation  Bill]  Annexed 

Budgets 

Following  section  I  [of  the  Appropriation  Bill],  which  is 
devoted  to  the  General  Budget,  section  II  of  the  fiscal  law — • 
with  the  heading,  "Annexed  Budgets,  to  order  (pour  ordre) 
attached  to  the  General  Budget"  ^ — includes  a  series  of  small 
special  budgets  with  the  following  titles :  Issuing  Money  and 
Minting  Medals;  National  Savings  Banks;  National  Printing 
Office;  Legion  of  Honor;  Fund  for  Invalid  Sailors;  Central 
School  of  Arts  and  Crafts;  Railroads  and  the  Port  of  la 
Reunion,  State  Railways,  etc. 

In  1913  there  were  nine  of  these  small  budgets;  there  were 
eight  in  1909;  previously  the  telephones  constituted  a  tenth 
branch ;  a  few  years  ago  there  were  only  seven  small  budgets ; 
this  is  not,  however,  the  crucial  point  of  the  question.  The 
question  at  issue  is :  Why  should  these  branches  of  the  service 
in  question  be  separately  classified,  regardless  of  whether  they 
number  seven,  eight  or  nine? 

The  contention  is  that  the  principle  of  universality  [com- 
prehensiveness], perfectly  proper  in  the  ordinary  budget, 
does  not  fit  the  industrial  pursuits,  which  must  be  treated  in 
the  accounts  from  the  commercial  point  of  view.  That  is, 
the  accounting  must  bring  revenues  together  with  the  proper 
expenditures  in  order  to  make  the  annual  balances  show  a 
profit  or  a  loss. 


^  In  former  times  the  annexed  budgets  were  called  "special  services 
attached  by  order  to  the  budget."  In  order  to  avoid  any  possible  con- 
fusion with  the  special  activities  of  the  Treasury  the  fiscal  law  for 
the  fiscal  period  of  1881,  dated  Dec.  22,  1880,  introduced  the  present 
title:  "Annexed  budgets  attached  by  order  to  the  General  Budget." 
The  law  of  July  9,  1836,  which  regulated  the  fiscal  period  1833,  first 
ordered  the  special  services  to  be  attached  to  the  general  budget. 


216 


CONTENTS  OF  THE  [FRENCH]  BUDGET 


From  this  our  definition  may  be  deduced.  The  annexed 
budget  specializes  the  revenues  and  the  expenditures  of  the 
various  enterprises  administered  by  the  State. 

Immediately,  however,  another  question  is  raised.  Why 
should  the  seven,  eight  or  nine  pursuits  cited  above  enjoy  the 
privilege  of  specialization  as  industrial  enterprises,  while 
many  others,  not  less  industrial,  are  carried  in  the  general 
budget,  as,  for  instance,  the  manufacturing  of  tobacco,  gun- 
powder, matches,  playing-cards  and  maps,  posts,  telegraphs 
and  telephones  ?  Why  the  one  and  not  the  other  ?  Why  some 
and  not  all?  Why  should  any  of  them  have  this  privilege? 
Before  trying  to  answer  this  question  let  us  review  the  various 
annexed  budgets,  the  list  of  which  has  been  given  above. 

The  Central  School  of  Arts  and  Crafts ,  founded  by  pri- 
vate initiative  in  1829,  managed  by  a  private  society  until 
1857,^  passed  into  the  hands  of  the  State  on  the  condition  that 
"the  proceeds  of  the  School  should  not  be  merged  with  the 
revenues  of  the  Treasury,  but  should  be  applied  to  meet  the  ex- 
penditures of  the  establishment."  The  law  of  June  15,  1857, 
while  ratifying  the  agreement  made  between  the  founders  of 
the  institution  and  the  State,  reproduces  verbatim  this  stipu- 
lation which  in  part  justifies  the  creation  of  the  present  branch 
outside  of  the  budget. ^  It  is,  however,  necessary  to  state  that 
this  is  the  only  case  of  that  nature. 

The  National  Printing  Oifice  has  been  complained  of  by 
independent  printers,  who  claim  to  turn  out  just  as  good  work 
at  lower  rates  than  the  Government  shop.  The  latter,  by 
virtue  of  its  monopoly,  takes  away  from  them  the  Govern- 
ment business  and  they  claim  that  this  in  no  way  benefits  the 

^  The  Central  School  of  Arts  and  Crafts  was  founded  in  1829  "by 
four  young  men  united  by  a  common  thought,  which  was  elaborated 
after  long  consideration."  (Speech  of  M.  Dumas  at  the  fiftieth  anni- 
versary of  the  school  on  June  21,  1879.)  These  four  young  men  were : 
Theodore  Olivier,  Peclet,  Martin  Lavallee  and  Dumas.  Until  1857 
the  founders  and  their  successors  insured  by  the  efforts  of  their  pri- 
vate initiative  the  progress  and  the  high  reputation  of  the  establish- 
ment, which  enjoyed  a  full  and  steadily  growing  prosperity,  when 
by  the  law  of  June  15,  1857,  it  was  made  an  establishment  of  the  State. 

2  To  a  certain  extent  it  would  have  been  sufficient,  in  order  to  re- 
spect the  wishes  of  the  founders,  to  have  opened  a  special  line  among 
the  items  in  the  budget  of  revenues  and  also  a  special  line  in  the 
chapter  devoted  to  the  Ministry  of  Public  Instruction  in  the  budget 
of  the  expenditures.  Then  the  general  financial  statement  every  year 
would  have  brought  the  revenues  and  expenditures  together  in  its 
statistics. 

217 


Why  Part 
of  State 
Enterprises 
So  Treated 


Central 
School  cf 
Arts  and 
Crafts 


National 
Printing 
Office 


THE  BUDGET 

taxpayers;  liberty  and  equal  opportunity  is  their  slogan.  By 
decree  of  April  i,  1887,  a  commission  was  organized,  the 
purpose  of  which  was  to  examine  into  these  grievances  and 
to  make  an  investigation  as  to  whether  the  State  should  dis- 
continue this  enterprise.  The  commission,  however,  re- 
frained from  voicing  any  such  far-reaching  decision.  (Re- 
port and  decree  of  August  28,  1889.)  The  very  fact  that 
there  has  been  constant  agitation  on  the  part  of  interested 
parties  ever  since  the  year  IV  of  the  Republic  ^  shows  that 
the  State  for  more  or  less  legitimate  reasons  exceeds  its  power 
in  this  particular. 
The  Public  The  telephones,  after  having  been  bought  up  and  monopo- 
Se^rT^°"^  lized  by  the  State,  were  included  among  the  annexed  budgets, 
beginning  with  the  fiscal  period  1891.  (Law  of  July  16, 
T889.)  The  irregularity  of  this  classification  needs  no  dem- 
onstration, since  the  Chambers,  as  a  result  of  numerous  pro- 
tests raised  by  their  members  and  suggested  by  the  Minister 
of  Finance  ^  himself,  have  definitely  decided  that  the  annexed 
budget  of  the  telephone  administration  has  no  right  of  exist- 
ence. 

"By  adopting  the  principle  of  budgetary  unification,  we 
affirm  that  the  telephones  constitute  a  public  service.  In 
the  beginning  it  was  possible  to  misapprehend  their  real 
character  ...,*'  said  the  statement  of  supporting  argu- 
ments on  the  budget  for  1893,  drawn  up  by  M.  Rouvier, 
March  10,  1892. 

This  argument  should  logically  have  brought  about  the  abo- 
lition of  almost  all  annexed  budgets.  The  law  of  December 
26,  1892,  limited  itself,  however,  to  making  the  following 
stipulation:  "Beginning  with  the  fiscal  period  of  1893,  the 
annexed  budget  of  telephones  is  and  shall  henceforth  be  dis- 
continued.    The  entries  of  revenues  and  of  expenditures  of 

^  "Thus  organized,  the  National  Printing  Office  has  run  for  seventy 
years,  but  has  not  enjoyed  a  quiet  existence,  'for  it  has  been  the  object 
of  attacks  and  discussions.  .  .  .* "  (Report  of  the  Commission  on 
Budget,  July  25,  1894.) 

2  "There  is  no  more  reason  for  making  an  annexed  budget  for  the 
telephones  than  a  special  budget  for  tobaccos,  or  for  any  other  in- 
dustry which  forms  a  part  of  the  administration  of  the  State  ...  as 
soon  as  we  admit  the  necessity  of  an  annexed  budget  for  telephones, 
we  have  to  admit  the  necessity  of  an  annexed  budget  for  posts!" 
(Speech  of  M.  Leon  Say  during  the  general  discussion  on  the  budget 
for  1891,  October  27,  1890.) 

218 


CONTENTS  OF  THE  [FRENCH]  BUDGET 


the  said  budget  shall  be  incorporated  in  the  general  budget  of 
the  State." 

The  railways  and  the  Port  of  la  Reunion  were  at  first 
turned  over  to  an  industrial  corporation  (law  and  agreement 
of  June  22i,  1877).  As  a  result  of  its  not  living  up  to  the 
conditions  of  the  contract,  the  State  at  present  handles  the 
administration  in  conformity  with  the  stipulations  of  the 
law  of  July  17,  1889  (Article  33),  and  of  the  decree  of  Oc- 
tober 29,  1889;  this  is,  however,  only  a  temporary  solution  of 
the  question.  The  word  temporary,  repeated  in  all  preceding 
documents,  precludes  criticism.  Since  1889,  however,  there 
has  been  plenty  of  time  to  wonder  why  a  temporary  arrange- 
ment should  still  persist. 

The  railroads  in  France  were  turned  over  to  private  cor- 
porations by  the  law  of  1842,  but  the  State  entered  the  field 
in  1878;  the  State  now  owns  a  system  of  railroads  of  more 
than  2,500  kilometers.  The  State  railways  undertake  to 
render  to  the  country  services  of  a  threefold  nature:  techni- 
cal, commercial  and  military.  (Report  of  the  Commission  on 
Budget  for  1888,  November  29,  1887.)  Without  entering 
into  the  heated  discussions  which  take  place  each  year  in  the 
legislature  over  the  contention  that  State  railways  pretend  to 
render  services  at  the  expense  of  the  taxpayers,  it  is  sufficient 
to  comment  on  the  following  phrase,  which  is  customarily 
used  for  the  purpose  of  justifying  the  institution:  "One  of 
the  principal  advantages  which  the  Government  derives  from 
owning  a  railroad  system  is  that  it  is  thus  possessed  of  a  field 
for  experimentation  entirely  its  own."  {Idem.)  If  it  were 
only  a  question  of  having  a  Held  for  experimentation,  or,  in 
other  words,  if  it  were  a  question  of  a  temporary  institution, 
the  classifying  of  the  State  railways  among  the  annexed  budg- 
ets would  be  excusable,  for  then  the  railways  would  be  out- 
side of  the  ordinary  budget  because  of  their  precarious  con- 
dition. But  if,  contrary  to  this  expectation,  the  institution 
shall  indefinitely  continue  its  experiments  and  become  a  nor- 
mal activity  of  the  State,  the  rules  of  a  sound  financial  policy 
would  require  that  the  ordinary  budget  should  assert  its 
rights  with  regard  to  that  institution,  as  is  the  case  in  other 
countries.  In  Prussia,  the  administration  of  State  railways, 
far  more  important  than  in  France,  forms,  with  the  total  of 
its  revenues  and  expenditures,  a  part  of  the  ordinary  budget. 
We  have  seen  that  even  in  Belgium  the  ordinary  budget  in- 
cludes  the    Ministry   of   Railroads,    Posts   and    Telegraphs. 

219 


Railways 
and  the 
Port  of  La 
Reunion 


Argument 
Favoring 
the  Special 
Funding  of 
Railroads 


THE  BUDGET 


The  Legion 
of  Honor 


Gunpowder 
Monopoly 


The  Mint 
and  Postal 
Savings 
Bank 


These  reflections,  applicable  to  the  old  system  of  State  rail- 
ways, apply  with  more  force  to  the  system  bought  up  from 
the  Western  Railway  Company,  which,  beginning  with  191 1, 
increased  the  annexed  budget  in  question  by  550,000,000 
francs. 

The  Fund  for  Invalid  Sailors,  organized  by  Colbert,  has 
maintained  its  autonomous  existence,  with  varying  fortune, 
since  1675.  At  different  times,  however,  in  spite  of  this  sup- 
posed autonomy,  the  State  has  taken  possession  of  the  funds 
which  constitute  the  patrimony  of  this  institution  on  the  con- 
dition that  the  Public  Treasury,  for  a  consideration,  should 
become  the  debtor  of  the  fund  in  case  the  latter  should  be  dis- 
solved. The  fund  in  question,  however,  is  fixed,  and  the  State 
pays  to  it  an  annual  subsidy  of  15,595,000  francs,  according 
to  the  budget  of  191 3. 

The  Legion  of  Honor,  established  in  1802,  provided  with 
a  special  endowment  (Law  of  the  29th  Floral,  year  X  of 
the  Republic),  receives,  besides  the  revenues  resulting  from  its 
original  endowment  and  from  various  other  resources,  a  sup- 
plement of  over  12,000,000  francs  furnished  by  the  ordinary 
budget  of  the  State.  The  Legion  of  Honor  provides  for  the 
payment  of  salaries  to  its  members  and  to  the  holders  of  mili- 
tary medals,  provides  for  paying  the  expenditures  of  the 
educational  institutions  of  Saint-Denis  and  of  Ecouen,  etc. 
It  has  often  been  suggested  that  the  Treasury  should  pay  di- 
rect the  salaries,  subsidies  and  relief-monies  carried  in  the 
budget  of  the  Legion  of  Honor;  the  deputy  reporting  on  the 
budget  for  1908  even  suggested  that  it  might  be  expedient  to 
attach  the  educational  institutions  of  Saint-Denis,  Ecouen  and 
les  Loges  to  the  Ministry  of  Public  Instruction  as  university 
establishments.  Then,  the  Legion  of  Honor  could  be  taken 
off  the  list  of  annexed  budgets,  which,  after  all,  may  happen 
some  day. 

The  service  of  manufacturing  gunpowder  and  nitrate  of 
potassium  was  put  into  an  annexed  budget  by  articles  32 
et  seq.  of  the  law  of  July  13,  191 1.  Is  it  expected  that  its 
exodus  from  the  general  budget  will  in  any  way  at  all  remedy 
the  corruption  which  has  so  deeply  stirred  public  opinion  ? 

Money  and  medals  are  minted  by  the  State  by  virtue  of  a 
sovereign  right  and  the  Postal  Savings  Bank  organized  in 
1879  constitutes  a  subsidiary  of  the  general  administration  of 
Posts.  ,  The  questions  asked  in  the  beginning  of  this  review 
have,  as  yet,  not  been  answered. 

220 


CONTENTS  OF  THE  [FRENCH]  BUDGET 

Not  only  is  the  independence  of  these  annexed  budgets  con- 
trary to  reason,  but  objections  to  them  have  long  been  ap- 
parent. 

A  deputy  reporting  on  the  fiscal  law  said :    "The  separate  Two  Objec- 
existence  of  annexed  budgets  makes  them  objectionable  in  two  *^°"^  *° 


particulars:  they  destroy  the  unity  of  the  budget,  and  render 
control  over  their  operations  more  difficult."  Those  accounts 
are  dangerous  which  withdraw  a  portion  of  the  public  funds 
from  the  guarantees  of  the  law.^  "Because  of  this  alone,  the 
administration  of  these  budgets  is  not  always  conducted  with 
the  necessary  consideration  for  the  interests  of  the  Treas- 
ury. .  .  .  There  is  little  consideration  for  the  equilibrium,  be- 
cause the  majority  of  these  budgets  are  regulated  by  means  of 
subsidies  from  the  Treasury.'*  ^ 

Already  many  of  these  annexed  budgets  have  been  attached 
to  the  general  budget ;  for  instance,  the  budget  of  telephones,^ 
which  was  mentioned  above,  and  others  mentioned  in  the  gen- 
eral financial  statement.  It  is  possible  that  a  new  attempt  to 
bring  about  a  complete  budgetary  unity  will  definitely  abolish 
the  entire  scheme. 

The  annexed  budgets  are  still  to  be  described  from  the 
point  of  view  of  accounting.  These  are  "specialized"  services 
[that  is,  they  are  financed  by  means  of  special  funds].    Each 


Special 
Funding 


^  The  general  financial  statement  explains  every  year  that  its  official 
tables  do  not  include  the  operations  of  the  annexed  budgets,  "because 
the  latter  submitted  to  a  special  regime  are  carried  out  outside  of  the 
sphere  of  the  Minister  of  Finance  by  special  accountant  officers  who 
are  not  compelled  to  submit  to  the  general  administration  of  public 
accounting  periodical  statements."  (General  memorandum  on  budget 
accounts.) 

2  In  a  speech,  supported  by  ample  documentary  evidence,  delivered 
on  December  27,  191 1,  M.  Jules  Roche  demanded  of  the  Chamber  the 
reintegration  of  the  annexed  budgets  into  the  general  budget.  It  is  a 
most  remarkable  thing  that  the  principle  of  the  reform  was  not  con- 
tested by  the  speakers  who  replied  to  him. 

*  Until  1885  the  general  financial  statement  reproduced  the  list  of 
special  services  and  annexed  budgets  which  were  successively  at- 
tached to  the  ordinary  budget.  Among  the  fugitives  which  have  thus 
returned  to  the  common  domicile,  let  us  cite  the  following:  the  serv- 
ice of  verification  of  weights  and  measures  (1826),  the  collections 
and  disposing  of  the  proceeds  from  the  tax  on  patents  (1834),  the 
resources  and  expenditures  of  the  primary  normal  schools  (1839), 
the  proceeds  and  revenues  of  Algiers  (1840),  the  revenues  and  ex- 
penditures of  universities  (1862),  etc.  These  examples  show  how  j 
many  services  would  like  to  establish  themselves  outside  of  the  budget  ) 
if  permitted  to  do  so.  _/ 

221 


THE  BUDGET 

Accounting  one  of  them  forms  a  distinct  personality,  the  revenues  for 
Features  which  are  brought  together  with  the  expenditures  in  order  to 
show  the  balance.  Leaving  out  of  consideration  interest  on 
invested  capital,  which  is  contrary  to  good  business  practice, 
this  balance  means  for  some  of  the  services  a  surplus  of  reve- 
nues and  for  others  a  surplus  of  expenditures.  The  surplus 
of  revenues  is  included  in  the  general  budget;  the  surplus  of 
expenditures  is  covered  by  appropriations  of  the  same  budget. 
Thus,  owing  to  this  shifting  of  entries,  the  budget  of  every 
annexed  service  is  balanced.^ 

^  The  following  are  the  figures  in  francs,  equal  in  revenues  and  in 

expenditures,  of  each  of  the  annexed  budgets  in  the  budget  of  1913 : 

Coining  money  and  minting  medals  6,762,500 

National  Savings  Bank  61,600,190 

National  Printing  Office  8,102,600 

The  Legion  of  Honor  16,913,637 

i  Gunpowder  and  nitrate  of  potassium     37,146,328 

I  Fund  for  Invalid  Sailors  25,562,659 

'  Central  School  of  Arts  and  Crafts  800,772 

'  Railways  of  la  Reunion  4,342,500 

State  Railways  661,990,300 


Total  of  the  annexed  budgets  in 

revenues  and  in  expenditures      823,221,486 


222 


CHAPTER  IX 

CONTENTS    OF   THE    [FRENCH]    BUDGET    (CON- 
TINUED) 

Section  III.     Special  Provisions:    Character  of  Items  Included. 

Section  IV.  Means  [Continuing]  of  Operating  and  Annual  Provi- 
sions [Terms  and  Conditions  Attached  to  the  Budget]  :  Three 
Classes  of  Items;  Provisions  Relative  to  the  Treasury:  To  Meet 
Floating  Debt ;  To  Meet  the  Floating  Debt  of  Paris ;  To  Pay  Short 
Term  Obligations;  The  Continuing  Appropriations  of  the  Budget: 
Amount  Required  to  Meet  Credits  D' Inscription;  The  Authorized 
Naval  Program;  Amounts  Required  for  School  Building  Plan; 
The  Internal  Improvement  Program ;  Capitalization  of  Railways 
by  Agreement;  Advances  for  Additions  and  Betterments;  Terms 
and  Conditions  Attached  to  the  Budget:  Provisions  Covering 
Prorogation ;  Material  for  Executive  Branches  of  the  Navy ;  Docu- 
ments to  Be  Submitted;  Collection  of  Taxes;  Recapitulation. 

Annexed  Documents ;  The  Two  Kinds ;  Documents  the  Result  of  Tra- 
dition :  Comparative  Summary  of  Revenues  and  Expenditures ;  De- 
tails of  Estimates  for  Expenditures;  Financial  Statements;  Docu- 
ments Required  by  Statute;  Report  on  Licenses;  Schedule  of  Per- 
sonal and  Property  Taxes ;  Report  on  Lodgings ;  Tobacco  Licenses ; 
Official  Salaries;  Materials  Furnished  to  Vessels  Under  Construc- 
tion; Supporting  Data. 

The  amounts  of  the  revenues  and  of  the  expenditures  hav- 
ing been  determined  by  the  General  Budget  (section  I)  and 
the  Annexed  Budgets  (section  II),  the  remaining  sections  of 
the  fiscal  law  have  only  to  deal  with  sundry  matters.  Many- 
important  measures,  however,  are  concealed  under  this  ge- 
neric title  of  Sundry  Provisions.  It  therefore  becomes  neces- 
sary to  study  them  with  more  care  than  their  designation  as 
sundry  would  suggest. 

These  Sundry  Provisions  fill  two  sections  of  the  fiscal 
law:  those  designated  Special  Provisions  (section  III)  and 
the  part  which  bears  the  title  Means  of  Operations  and  An- 
nual Provisions  (section  IV). 

Section  III.     Special  Provisions 

Section  III  of  the  budget  for  191 3,  bearing  the  heading 
"Special  Provisions"  and  inaugurated  by  the  budget  law  of 

223 


THE  BUDGET 


Character 
of  Items 
Included 


April  13,  1898/  includes  everything  which  has  been  inserted 
once  for  all  in  the  fiscal  law.  It  can  be  said  that  this  section 
contains :  "the  provisions  introduced  for  the  first  time  in  the 
fiscal  law  and  not  intended  to  be  inserted  in  this  law  every 
year." 

Choosing  our  examples  from  the  fiscal  law  of  1908,  we  find 
in  section  III  matters  relating  to  the  amortization  of  the  loan 
which  was  made  on  the  occasion  of  the  expedition  to  China; 
there  is  also  a  provision  for  a  new  system  of  accounting  for 
the  gifts  and  bequests  given  to  the  State  or  to  the  various  pub- 
lic adrninistrations ;  there  is,  too,  a  provision  adopted  for  ob- 
ligatory assistance  to  old  people,  which  entails  supplementary 
expenditures;  a  provision  relating  to  the  daily  allowance  al- 
lotted to  families  of  reservists  and  to  soldiers  of  the  territorial 
Army  entitled  to  subsidies  for  their  families  during  the  time 
they  are  called  to  the  colors  for  purposes  of  drill;  there  is 
also  an  advance  of  25,000,000  francs  which  was  granted  to  the 
General  Government  of  Indo-China;  also  allowances  al- 
lotted to  officials  of  certain  post-offices,  and  a  supplementary 
allowance  to  post-office  agents  who  handle  public  funds  over 
their  counters,  etc. 

This  summary,  although  incomplete — section  III  of  the 
budget  [Act  of  Appropriation]  for  1908  contains  29  articles 
— suffices  to  show  the  nature  of  the  "special  provisions," 
many  of  which  influence  the  budget  because  they  result  in 
expenditures. 


Three 
Classes 
of  Items 


Section  IV.     Means    [Continuing]   of  Operation  and 

Annual    Provisions    [Terms    and    Conditions 

Attached  to  the  Budget] 

Section  IV  [of  the  Act  of  Appropriation]  under  the  title 
"Means  of  Operation  and  Annual  Provisions"  requires  a 
somewhat  longer  explanation. 

Speaking  generally,  the  subject  matter  of  this  section  may 
be  characterized  as  follows :  "the  clauses  which  it  contains  are 
intended  to  be  included  each  year  in  the  fiscal  law  of  which 
they  form  an  integral  part."  In  order,  however,  to  grasp  the 
nature  and  the  importance  of  these  clauses  a  general  definition 

^  Until  1898  only  one  section  with  the  following  title,  "Means  of 
Operations  and  Various  Provisions,"  combined  the  two  sections  which 
are  now  separated. 

224 


CONTENTS  OF  THE  [FRENCH]  BUDGET 

is  not  sufficient.  Let  us  divide  them,  therefore,  into  three  cate- 
gories instead  of  analyzing  them  at  random,  just  as  they  are 
enumerated  under  21  heads  in  the  budget  for  1908  and  in  the 
26  heads  of  article  IV  of  the  budget  for  191 3,  and  let  us  em- 
phasize in  succession:  (i)  the  provisions  relating  to  the 
Treasury;  (2)  the  provisions  [continuing  appropriations]  of 
the  budget;  (3)  [terms  and  conditions]  routine  or  formal 
provisions. 

Proznsions  Relative  to  the  Treasury:  The  provisions  relat- 
ing to  the  Treasury  deal  with  treasury  bonds,  bonds  of  the 
City  of  Paris,  and  with  short  term  obligations. 

The  bonds  of  the  Treasury  are:  "interest  bearing  securities, 
redeemable  after  a  term  of  from  one  month  to  one  year,^ 
which  the  Treasury  sells  over  its  counters."  They  constitute, 
as  we  shall  see,  one  of  the  elements  of  the  floating  debt.  Each 
fiscal  law  must  determine  the  maximum  amount  of  these  is- 
sues. The  law  of  July  9,  1902,  at  the  time  of  changing  the  To  Meet 
rate  of  interest  from  3^^  per  cent  to  3  per  cent  increased  ^^"^.^'"^ 
this  maximum  to  500,000,000  francs  and  the  law  of  April  13, 

191 1,  to  600,000,000  francs.  In  fact,  the  [outstanding]  is- 
sues do  not  reach  these  limits.  In  October,  1895,  the  treasury 
bonds  in  circulation  did  not  exceed  the  sum  of  227,000,000 
francs;  on  July  i,  1905,  there  were  346,736,000  in  circula- 
tion; on  May  i,  1907,  the  sum  of  415,000,000;  on  April  i, 

1912,  the  sum  of  235,924,000  francs. 

Besides  the  treasury  bonds  put  into  circulation  by  virtue  of 
the  annual  article  of  the  fiscal  law,  other  bonds  are  perma- 
nently deposited  with  the  Bank  of  France  as  collateral  for 
advances  of  money  made  by  the  latter,  as  a  result  of  the 
agreements  of  1857  and  1878  and  for  a  new  advance  of 
40,000,000  made  in  1897,  the  total  was  brought  to  200,000,- 
000  francs  by  the  law  of  December  29,  191 1. 

The    issue   of   municipal   treasury   bonds  of  the   City   of  To  Meet 
Paris  is  specially  authorized  by  the  fiscal  law,  because,  as    !^^  ?l°?f"  1 

S-        •      •    1  •   •      i-^'  J.  1   ^  ing  Debt  of 

a  matter  of  prmciple,  municipalities  are  not  supposed  to  ere-   paris 

^  The  rate  of  interest  on  Treasury  bonds  running  for  from  i  to  3 
months,  to  6  months  to  i  year,  varies  constantly  by  category  according 
to  the  locality  and  the  more  or  less  pressing  needs  of  the  Treasury. 
These  rates  are  determined  by  orders  of  the  Minister  of  Finance,  and 
were  of  late  determined  as  follows : 

i^  per  cent    for  bonds  of  from  i  to  3  months.     • 
i^  per  cent    for  bonds  of  from  3  to  4  months. 
2      per  cent    for  bonds  of  from  4  months  to  i  year. 
225 


THE  BUDGET 

ate  floating  debts.     It  is,  therefore,  an  exception  which  has 
been  admitted  for  the  benefit  of  the  City  of  Paris  since  1859; 
this  exception  is  ratified  by  section  IV,  which  limits  the  maxi- 
mum of  the  issue  to  40,000,000  francs. 
To  Pay  *' Short  term  obHgations"   are  "securities  redeemable  at  a 

ObligationT  ^^^^  ^^^^  after  one  or  several  years  (generally  six  years)  ; 
these  securifies  with  coupons  attached  are  sold  by  the  Treas- 
ury over  its  counters."  Without  going  into  the  history  of 
short  term  obligations — they  were  first  issued  in  1875,  at 
the  time  of  the  preparation  for  the  second  payment  [on  the 
German  Indemnity],  to  which  account  they  were  one  of  the 
main  contributory  elements.  They  have  been  used  for  vari- 
ous purposes,  and  are  included  for  two  reasons  in  section 
IV  of  the  present  fiscal  laws.  The  first  article  authorizes 
the  Minister  of  Finance  to  provide  for  the  redemption  of 
obligations  which  are  to  fall  due  during  the  year,  by  means 
of  an  issue  of  new  obligations  of  the  same  kind.  This  means 
that  in  case  of  failure  to  pay  cash  for  the  securities  which 
fall  due,  the  securities  can  be  refunded.  The  second  article 
allots  the  surplus  of  revenue  ascertained  at  the  close  of  the 
fiscal  period  to  the  redemption  of  obligations  which  are  in 
circulation.  Among  the  exceptional  resources  of  1908  there 
was  an  issue  of  56,500,000  francs  of  short  term  obliga- 
tions, intended  to  make  up  the  deficit  in  the  normal  reve- 
nues. In  191 3,  the  provisional  account  provided  for  wiping 
out  the  deficit. 

The  Continuing  Appropriations  of  the  Budget:  The  [con- 
tinuing appropriations]  provisions  forming  the  second  sub- 
division of  provisions  relating  to  the  Treasury  apply  either 
to  obligations  to  be  met  under  [continuing]  appropriations 
or  to  obligations  to  be  met  for  [previously  authorized] 
works  to  be  done. 

They  apply  to  obligations  to  l)e  met  under  [continuing] 
appropriations  as  a  matter  of  law,  such  as  pensions,  neigh- 
borhood-roads, the  establishment  and  construction  of  schools, 
whon  the  Minister  is  authorized  to  incur  obligations  involving 
a  certain  fixed  amount  to  be  charged  against  the  appropria- 
tions of  the  current  fiscal  period  or  of  the  folloiving  fiscal 
periods.  They  apply  also  to  obligations  incurred  for  works 
carried  out  by  the  State  or  caused  to  be  carried  out  with 
funds  other  than  its  own,  the  amount  of  which  funds  the 
State  will  reimburse  by  means  of  long-term  bonds. 

The  obligations  relating  to  pensions  are  called  credits  d'in- 

226 


CONTENTS  OF  THE  [FRENCH]  BUDGET 

scription,  which  must  be  distinguished   from  the  credits  de  Amount 
payement.     The  latter  only  fix  the  annual  amount  of  arrears  ^^Me7t^ 
to  be  paid  to  the  living  pensioners  or  to  those  who  take  their   Credits  d'ln- 
place  when  vacancies  occur;  these  are  the  appropriations  of   scription 
the  general  budget,   schedule  A   section  of  the  public  debt. 
New  needs,  however,  may  arise  and  render  the  credits  de 
payement  insufficient.     Then  the  credits  d' inscription,  within 
section  IV,  authorize  the  Ministers  to  approve  and  to  have 
entered   in   the   ledger  the   new   pensions   which   exceed   the 
vacancies;  these  are  supplementary  pensions  to  be  paid  later 
by  means  of  the  credits  de  payement,  either  as  an  additional 
charge  against  the  current  fiscal  period,  or  as  a  charge  against 
following  fiscal  periods.^ 

As   far   as   naval   constructions  are   concerned,   an   article   The  Au- 
of  section  IV,  shown  in  an  annexed  schedule,  determines  the    Navafpro- 
names  and  the  types  of  vessels  which  the  Minister  of  the   gram 
Navy  can  order  constructed  in  the  yards  by  private  indus- 
trial concerns,  and  gives  the  appropriations  to  be  allotted  to 
each  vessel,  either  in  the  current  fiscal  period  or  in  the  fol- 
lowing fiscal  periods.      Thus,   the   entire   naval   program   is 
outlined  with  its  required  appropriations   for  several  years. 
Generally  speaking,  all  the  large  programs  of  national  de- 
fense and  of  public  works,  which  exceed  the  budgetary  limit 
of  one  year,  are  placed  in  section  IV.     We  shall  return  later 
to  this  kind  of  authorization. 

In  the  same  way   the  ministers  are  authorized  to  incur   Amounts 
obligations  for  an  amount  fixed  by  section  IV,  with  regard   ^^r^"schooI 
to  subsidies  intended   for  the  construction  of  neighborhood   Building 
roads,   for  school  buildings,   for  primary  and  secondary  in-   P^an 
struction;  these  obligations  must  be  charged  ^'either  against 
the  appropriations  made  by  the  current  fiscal  law,  or  against 
the  appropriations  to  be  made  in  the  budgets   for  the  fol- 
lowing fiscal  periods."     As  a  matter  of  fact,  it  is  necessary 
in  the  case  of  these  subsidies  that  the  interested  parties,  gen- 
erally the  niunicipalities,  which  have  charge  of  carrying  out 
the  work,  be  informed  as  to  the  dates  and  as  to  the  amounts 
that  are  to  be  paid. 

^  "The  name  credits  d'inscription  is  given  to  the  appropriation  which 
appears  in  the  last  section  of  the  budget,  and  is  a  real  supplementary 
appropriation,  voted  in  advance,  because  it  was  anticipated  that  the 
number  of  pensions  would  exceed  the  number  of  vacancies  made  avail- 
able through  expiration."  (Speech  of  Deputy  Jules  Roche,  who  re- 
ported in  the  name  of  the  Commission  on  Budget,  February  7th, 
1889.) 

227 


THE  BUDGET 


An  Internal 
Improve- 
ment Pro- 
gram 


Capitaliza- 
tion of  Rail- 
ways by 
Agreement 


For  a  long  time  the  ministers  have  made  such  agree- 
ments with  no  preHminary  authorization  and  without  restric- 
tion as  to  amount.  But  abuses  were  discovered  and  during 
the  past  few  years  the  law  itself  has  regulated  the  matter. 

Thus,  the  first  obligations  entered  in  section  IV  concern 
appropriations  authorized  for  a  period  exceeding  the  current 
fiscal  period,  and  constituting  charges  against  future  fiscal 
periods,  for  which  the  fiscal  law  as  a  matter  of  principle  can 
make  no  stipulations. 

Then  follow  stipulations  with  regard  to  works  to  be  done. 

In  former  times  chambers  of  commerce,  cities,  depart e- 
ments  [provinces] — in  order  to  expedite  the  construction  of 
works  in  which  they  were  interested,  such  as  new  buildings 
or  improvements  of  ports,  irrigation  canals,  canals,  rivers, 
etc. — offered  to  the  State  under  the  name  of  "contributory 
funds"  (fonds  de  concours)  either  subsidies  or  advances. 
The  fiscal  law,  in  a  special  article  of  the  last  section,  au- 
thorized the  use  of  these  funds.  Thus,  for  1891,  I3,5oo,ckx) 
francs  worth  of  works  carried  out  with  the  funds  contributed 
or  loaned  in  the  above  way  were  authorized;  for  1892,  works 
to  the  extent  of  11,521,^00  francs  were  authorized.  Then 
the  figures  began  to  decrease;  only  past  commitments  were 
liquidated;  since  1905  no  authorization  of  that  nature  is  to 
be  found  in  section  IV.  In  fact,  the  Government,  acting  in 
concert  with  the  commissions  on  budget  and  with  the  cham- 
bers, has  abandoned  the  system  of  disguised  loans  from  cities 
and  corporations.  Agreements  made  with  railway  companies, 
however,  require  the  entering  in  section  IV  of  obligations 
relating  to  works.  The  agreements  of  1883  allowed  to  the 
large  companies  8,500  kilometers  of  new  railroad  lines;  the 
outlay  for  construction  and  initial  equipment  was  estimated 
at  2,600,000,000  francs. 

How  were  these  2,600,000,000  to  be  paid?  "The  expendi- 
tures for  the  construction  of  the  lines  should  be  charged  to 
the  State,"  said  the  arguments  in  substance;  the  companies 
were  supposed  to  furnish  only  "subsidies"  fixed  at  25,000 
francs  per  kilometer  for  the  greater  part  of  the  new  lines; 
these  subsidies  were  also  fixed  at  a  lump  sum  in  the  case  of 
the  Northern  Railroad  and  of  the  Orleans  Railroad;  the 
entire  balance,  that  is,  the  larger  part  of  the  expenditure  had 
to  be  borne  by  the  State.  ^    The  latter,  fearing  repeated  loans, 


^  The  2,600,000,000  francs  which  the  companies  must  put  at  the  dis- 

228 


CONTENTS  OF  THE  [FRENCH]  BUDGET 

negofiated  directly  by  the  Treasury,  preferred  to  entrust  the 
companies  with  negotiating  the  loans  for  the  State's  account, 
taking  upon  itself  to  reimburse  these  loans  to  the  amount  of 
their  bond  emissions  by  annuities,  including  the  interest  and 
the  amortization  of  the  advanced  fund. 

This  concise  statement  shows  the  nature  of  the  annual 
provisions  which  section  IV  contained  with  regard  to  the 
agreements  for  1883.  The  moment  the  State,  although  in  a 
roundabout  way,  actually  pays  the  major  part  of  the  building 
costs  of  the  new  lines,  there  rests  with  it  the  right  to  regulate 
them.  Because  of  the  fact  that  the  extent  of  the  works  to 
be  done  is  reflected  in  the  figure  of  annuities  to  be  entered 
in  the  budget  of  expenditures,  the  fiscal  law  must  determine 
their  maximum.  Therefore,  the  following  article  is  included 
in  section  IV: 

"The  works  to  be  carried  out  in  the  course  of  the  year 
.  .  .  either  by  the  railroad  companies  or  by  the  State, 
with  the  help  of  advances  which  these  companies  put  at 
the  disposal  of  the  Treasury,  in  conformity  with  the 
agreements  ratified  by  the  laws  of  November  20,  1883 — • 
shall  not  exceed  the  maximum  of  ..." 


In    1 89 1    and    in    1892    this    maximum    was    160,000,000 
francs.     Reduced  gradually,  in  1906  it  totalled  only  67,000,- 
000  francs;  in   1909  to  63,000,000;  in   1913  to  80,000,000. 
The  same  is  true  of  the  so-called  ''additions  and  better- 
ments," that  is,  the  works  which  railway  companies  under- 
take on  lines  already  completed,  construction  accounts  which   Advances 
have  been  closed;  such  additions  and  betterments  are,   for   fpr  Addi- 
example,  the  improving  of  roadl3eds,  the  enlarging  of  sta-  BeJ^grmelits 
tions,  the  installation  of  signal  systems,  the  reinforcing  of 
rails,   the   enlarging  of  work   shops,  the  adding  of  artistic 
features,  etc.     These  are  "new  works  undertaken  or  to  be 
undertaken   on   already  completed   lines,   which   works  may 

posal  of  the  State  are  distributed  as  follows  according  to  the  original 
estimates : 

Reimbursements  of  guarantees  of  interest 550,400,000  francs 

Special  subsidies   (Northern  and  Orleans  Rail- 
roads)           130,000,000  francs 

Subsidy  of  25,000  francs  per  kilometer 195,000,000  francs 

Funds  advanced  to  the  State 1,724,000,000  francs 

Total 2,600,000,000  francs 

229 


THE  BUDGET 


Provision 
Covering 
Proroga- 
tion 


Material 
for  Ex- 
ecutive 
Branches  of 
Navy 

Documents 
to  Be 
Submitted 


operate  to  increase  the  capitalization  of  the  establishment, 
as  originally  fixed."  As  the  guarantee  of  interest  by  the 
State  is  calculated  on  the  basis  of  the  original  capitalization, 
the  fiscal  law  must  fix  the  amount.  Thus,  section  IV  deter- 
mines for  every  railroad  company  the  nature  and  amount  of 
additions  and  betterments  to  be  charged  to  the  capital  ac- 
count during  the  course  of  the  fiscal  period :  35,000,000  francs 
in  1891 ;  50,000,000  in  1892;  70,000,000  in  1906;  92,000,- 
000   in    1908;    107,000,000   in    1909;    125,000,000   in    1913. 

Terms  and  Conditions  Attached  to  the  Budget:  We  have 
mentioned  above  the  routine  or  formal  provisions.  This  class 
is  headed  by  the  list  of  voted  works  for  which  additional 
appropriations  can  be  made  by  the  Government  during  the 
prorogation  of  the  Chambers.  An  annexed  schedule  com- 
ments on  this  list  which  will  be  considered  in  Chapter  XVII, 
where  we  shall  speak  of  Additional  Appropriations  and  of 
the  law  of  December  14,  1879,  which  regulates  them. 

Another  article  of  section  IV  determines  the  value  of  the 
material  to  be  furnished  to  the  executive  branches  of  the 
Navy  for  their  use  during  the  year;  this  article  is  called 
appropriations  of  materials. 

Still  another  article  refers  to  an  annexed  schedule  in- 
cluded in  the  fiscal  law  and  in  which  appears  a  list  of  all  the 
documents  which  the  various  ministries  must  submit  periodi- 
cally to  the  Chambers  in  order  to  justify  the  carrying  out 
of  certain  works.  The  number  of  these  documents  in  the 
budget  of  191 3  is  48. 

Finally,  we  have  the  last  article  of  the  fiscal  law,  a  sacro- 
sanct article,  which,  since  the  beginning  of  the  Restoration,* 
has  closed  the  series  of  sundry  provisions,  and,  therefore, 
deserves  to  be  quoted  in  extenso: 

^  This  article  reproduces  almost  verbatim  article  32  of  the  law  of 
April  28th,  1816,  which  has  been  repeated  until  the  present  day  from 
one  budget  to  another.  In  former  times,  the  fiscal  law  of  September 
23,  1 814,  from  the  first  return  of  the  Bourbons,  inaugurated  this 
formula,  but  in  a  less  complete  form,  in  article  19,  which  seems  to 
be  interesting  enough  to  quote  for  riie  sake  of  historical  interest: 
"Every  direct  tax,  other  than  the  taxes  imposed  by  the  present,  is, 
regardless  of  its  purpose  and  regardless  of  its  name,  formally  pro- 
hibited under  penalty  of  prosecution  on  charges  of  extortion  to  be 
preferred  against  the  local  authorities  who  would  impose  such  a  tax, 
the  officials  who  would  make  out  the  assessment  rolls,  and  the  col- 
lectors and  revenue  agents  who  would  carry  out  the  collections." 
(Article  19  of  the  law  of  September  23,  1814.) 

230 


CONTENTS  OF  THE  [FRENCH]  BUDGET 

"All  direct  and  indirect  taxes  other  than  those  author-  Collection 
ized  by  the  fiscal  law  for  the  fiscal  period  19 — ^,  regard- 
less of  the  purpose  and  regardless  of  the  name  under 
which  they  are  collected,  are  formally  prohibited,  under 
penalty  of  prosecution  for  extortion.  Those  liable  to 
such  prosecution  are:  the  authorities  who  would  impose 
such  taxes,  officials  who  would  make  out  the  assessment 
rolls  and  rates,  and  all  those  who  would  collect  such  taxes ; 
an  action  for  recovery  within  three  years  against  collec- 
tors, revenue  agents  and  all  individuals  essaying  to  collect 
such  taxes,  is  not  prejudiced  by  the  above." 

This  formula  includes  the  entire  parliamentary  theory  of 
taxation.^  The  successive  conquests  of  the  Etats  Generaux, 
the  exclusive  rights  of  the  representatives  of  the  nation,  are 
affirmed  and  sanctioned  with  facility  in  this  formula  in  a 
precise  and  effective  way.  Any  authority  attempting  to  col- 
lect taxes  beyond  the  limits  voted  by  legislature  would  be 
liable  to  prosecution  on  a  charge  of  extortion ;  the  accountant 
[accountable  officer]  who  would  carry  out  such  collections 
would  render  himself  liable  to  prosecution  on  the  same  charge 
without  prejudice  to  an  action  for  recovery  which  might  be 
brought  against  him  within  three  years.  No  agent  can  hide 
behind  his  orders  and  throw  the  responsibility  on  his  su- 
periors; the  legislature  holds  each  personally  responsible,  and 
every  accountable  officer,  regardless  of  his  rank,  is  directly 
amenable  to  the  legislature  which  demands  absolute  obedi- 
ence in  these  matters,  from  high  and  low  throughout  the 
entire  official  family. 

Recapitulation:  The  articles  of  the  fiscal  bill — divided  into 
four  sections,  as  we  have  indicated,  with  their  annexed  official 

^  The  date  of  the  year  for  which  the  authorization  is  given  has  been 
added  since  the  events  of  May  16,  1877.  As  the  question  of  the  re- 
fusing of  the  budget  was  raised  at  that  time,  some  writers  expressed 
the  opinion  that,  strictly  speaking,  the  Government  may  collect  taxes 
without  the  vote  of  the  legislature,  because  the  previous  laws  have 
authorized  the  collections  in  a  permanent  way.  In  order  to  deprive 
such  reasoning  of  every  possible  excuse,  the  fiscal  laws  have  since 
specified  in  the  final  article  the  year  to  which  the  authorization  ex- 
clusively applies. 

2  An  analogous  article  would  be  necessary  with  regard  to  expendi- 
tures, as  will  be  shown  in  Chapter  XXV.  The  gap  itself  cannot  be 
explained.  If  any  one  of  those  who  prepared  the  budget  would  reread 
this  final  article  before  copying  it,  he  undoubtedly  would  complete  it. 

231 


THE  BUDGET 


Of  Two 
Kinds 


schedules  A,  B,  C,  D,  and  the  following  ^—constitute,  after 
they  have  been  voted  on,  the  complete  text  of  the  budget 
law.  The  Minister  of  Finance  has  thus  completed  his  main 
work,  the  program  of  the  financial  destinies  of  the  country, 
which  the  public  always  awaits  with  interest  and  which  is 
to  be  the  subject  for  numerous  commissions,  for  public  dis- 
cussion and  for  votes  of  representative  assemblies. 

Before  closing  the  study  of  the  budget,  let  us  furnish  a 
statement  relating  to  the  contents  of  the  volume  carrying  the 
fiscal  bill. 

Annexed  Documents 

Having  completed  our  considerations  of  the  contents  of 
the  budget  law,  one  other  subject  remains — that  of  "annexed 
documents" — the  last  thing  inserted  in  the  volume  containing 
the  law. 

The  part  bearing  the  heading  Annexed  Documents  ^  makes 
up  a  larger  part  of  the  volume  than  the  other  portions,^ 
although  it  is  of  much  less  importance.  The  selection  of 
these  annexed  documents  results  from  ancient  traditions  and 
from  special  legislative  provisions. 


Compara- 
tive Sum- 
mary of 
Revenues 
and   Ex- 
penditures 


Documents  the  Result  of  Tradition:     Among  those  which 
are  the  result  of  tradition,  we  may  cite  the  following : 

A  comparative  summary  of  the  proposed  revenues  and 
expenditures  with  the  revenues  and  expenditures  voted 
for  the  preceding  fiscal  period; 

A  detailed  table  of  proposed  revenues,  arranged  by  ave- 
nues for  collection,  preceded  by  a  preliminary  note  which 
explains  the  system  of  estimating  adopted,  the  results 
of  the  preceding  fiscal  period,  and  eventually  the  pro- 
posed legislative  changes; 

A  detailed  table  supporting  requests  for  appropriations, 

*  We  emphasize  in  this  connection  that  the  annexed  schedules  A, 
B,  C,  D,  etc.,  form  an  integral  part  of  the  fiscal  law,  and  should  under 
no  circumstances  be  confused  with  the  annexed  documents,  which  are 
but  references. 

-  We  combine  under  the  name  annexed  documents  what  the  vol- 
umes on  budget  call  annexes  to  the  statement  of  supporting  argu- 
ments, comments  supporting  the  revenues  and  finally  annexes  in  brief. 

3  The  statement  of  supporting  arguments  and  the  text  of  the  fiscal 
bill  occupy  from  150  to  190  pages  in  the  budget  volumes.  The  balance 
of  about  2,250  pages  is  filled  by  annexed  documents. 

232 


CONTENTS  OF  THE  [FRENCH]  BUDGET 


arranged  by  ministries.  This  is  the  most  extensive  an- 
nex. A  preliminary  note^ — followed  by  a  series  of  ex- 
planatory documents  for  each  ministry — furnishes  the 
information  relating  to  the  personnel  or  to  materials, 
justifies  the  requested  increases,  and  analyzes  the  ap- 
propriations not  only  by  chapters  but  by  the  smaller 
subdivisions,  such  as  paragraphs  and  articles  [items]. 
Figures  relating  to  works  to  which  the  legislature  has  to 
devote  special  attention  are  analyzed  in  minute  statisti- 
cal tables,  particularly  so  far  as  the  departments  of  War 
and  Navy  are  concerned.  The  report  of  each  ministry 
forms  a  separate  part,  the  examination  of  which  is  facili- 
tated by  such  segregation. 


Details  of 
Estimates 
for  Ex- 
penditures 


Documents  relating  to  the  Treasury,  annexed  to  the  state- 
ment of  supporting  arguments,  are  made  up  under  the  main 
heads:  table  of  the  decouverts  of  the  Treasury,  table  of  the 
floating  debt,  and  the  table  of  special  activities  of  the  Treas- 
ury; these  three  tables  form  the  elements  of  the  balance  sheets 
of  the  Treasury  and  are  analyzed  later  in  Chapter  XI. 


Financial 
Statements 


Documents  Required  by  Statute:  The  second  category — 
composed  of  documents  which  by  virtue  of  Various  special 
laws  are  inserted  in  the  volumes  of  the  budget — contains  par- 
ticularly : 


A  memorandum  concerning  the  execution  of  the  law  on 
licenses  (laws  of  July  15,  1880,  and  June  29,  1881); 
a  schedule,  arranged  by  departements,  of  changes  made 
in  the  quotas  of  the  personal  and  property  tax  (law  of 
August  4,  1884)  ; 

A  detailed  schedule  of  lodgings  given  in  buildings  under 
the  supervision  of  the  Administration  of  State  Domains  ^ 
(law  of  April  23,   1883,  article   12)  ; 


Report  on 
Licenses 

Schedule  of 
Personal 
and  Prop- 
erty Taxes 

Report  on 
Lodgings 


1  The  budget  bill  for  the  fiscal  period  1887,  submitted  on  March 
i6th,  1886,  by  M.  Sadi-Carnot,  suggested  the  discontinuation  of  the 
annual  insertion  of  this  schedule  in  the  budget  volume,  stating  quite 
justly  that  the  reproduction  of  such  long  tables  overloaded  the  budget 
uselessly  and  involved  heavy  costs. 

It  would  be  sufficient  apparently  to  prescribe  that  this  document  be 
deposited  with  the  libraries  of  the  Senate  and  of  the  Legislative  Body, 
where  it  would  be  kept  handy  for  reference  purposes.  (Article  4 
of  the  budget  bill  for  1887.) 


233 


THE  BUDGET 


Tobacco 
Licenses 

Official 
Salaries 


A  list,  by  names,  of  tobacco  licenses  granted  during  the 
course  of  the  year  (law  of  July  27,  i860,  article  40)  ; 
a  list  of  prefects,  subprefects,  secretaries  general,  and 
councilors  of  the  prefecture,  who,  for  personal  reasons, 
draw  a  salary  exceeding  the  amount  generally  allotted 
to  their  place  of  residence;  this  list  also  includes  the 
dates  of  appointments  of  these  officials.  (Fiscal  law  of 
February  26,  1887,  Article  48.) 


Materials 
Furnished 
to  Vessels 
Under  Con- 
struction 


Supporting 
Data 


Various  schedules  relating  to  supplies  for  the  Navy,  to 
the  vessels  under  construction,  to  the  works  in  harbors,  and 
to  the  working  personnel.  (Provisions  of  the  annual  fiscal 
laws  inserted  among  the  means  of  operations  and  sundry  pro- 
visions, as  indicated  above.) 

Moreover,  the  legislative  commissions  demand  of  the  min- 
isters the  manuscripts  of  schedules  and  references  which  they 
deem  necessary  for  purposes  of  control;  usually  the  commis- 
sions insert  these  documents  as  a  continuation  of  their  reports. 

In  brief,  the  statement  of  supporting  arguments,  the  text 
of  the  fiscal  law  and  the  annexed  documents — three  parts  of 
unequal  dimensions,  and,  above  all,  of  unequal  importance — 
compose  the  volume  of  the  budget  bill. 


234 


CHAPTER   X 

EXTRAORDINARY    BUDGETS    AND    BUDGETS    OF 
SPECIAL   RESOURCES 

History  of  Extraordinary  Budgets  in  France:  The  Old  Regime 
Eliminated  from  This  Discussion ;  The  Extraordinary  Budget  Dur- 
ing the  Revolution;  During  the  Consulate;  During  the  Restoration; 
The  July  Monarchy;  The  Law  of  1837;  The  Extraordinary  Budget 
to  Be  Met  by  Loans;  Attempt  to  Reestablish;  Reappearance  of 
Characteristic  Features;  Arguments  Supporting;  Again  Abol- 
ished in  1 871;  The  Liquidation  Accounts;  Not  a  Complete  Return 
to  the  Old  Practice;  Occasions  on  Which  Extraordinary  Budgets 
Have  Lately  Been  Used;  Definition  of  Same  as  Now  Used  in 
France. 

Discussion  of  the  Merits  of  Extraordinary  Budgets:  Necessary  Ex- 
penditures Authorized ;  Funds  Needed  to  Meet  Great  Emergencies ; 
A  Mistaken  Notion  That  Such  Occasions  Necessitate  an  Ex- 
traordinary Budget ;  England  Met  Such  Expenditures  by  Taxation ; 
Optional  Expenditures  Authorized:  Confined  to  Public  Works; 
The  Amount  and  the  Time  Discretionary;  Should  Not  Be  in  Ex- 
traordinary Budget;  The  Extraordinary  Budget  Opens  the  Way  to 
Subterfuge ;  Temptation  to  Abuse ;  Excuses  Offered ;  Evils  Pointed 
Out  by  the  Cour  des  Comptes;  Efforts  to  Have  Practice  Discon- 
tinued; In  1889  Limited  to  Emergencies  of  War;  The  End  of  Ex- 
traordinary Budgets  in  France. 

Extraordinary  Budgets  Abroad:  The  Practice  in  England:  Every- 
thing Included  in  the  Budget ;  Works  Funded  with  Loans ;  Separate 
Financing  Opposed;  Practice  in  Germany:  Three  Parts  Opposed; 
Extraordinary  Expenditures;  Temporary  Expenditures;  The  Ex- 
traordinary Budget ;  The  Practice  in  Prussia ;  The  Practice  in  Aus- 
tria-Hungary;  The  Practice  in  Italy;  The  Practice  in  Russia;  The 
Practice  in  Belgium;  Adverse  Comment  on  Practice  There;  The 
Practice  in  Japan. 

Budget  of  Special  Resources:  Agency  Accounts;  Deductions  from 
Revenues,  etc.;  Origin  of  Practice  in  France;  Not  a  Part  of  State 
Finances;  Charter  of  Items  Included:  Definition;  Collections  for 
Municipalities:  Communes  Control  Their  Finances;  Collecting  for 
Departements:  Local  Autonomy  of  Departements;  The  Fiscal  Law 
of  1893;  Reductions  from  Revenues,  etc. 

The  ordinary  budget  has,  so  to  speak,  no  history,  because 
it  is  legitimate ;  its  figures  may  change,  but  the  institution  itself 

23s 


THE  BUDGET 

necessarily  goes  back  to  the  very  beginning  of  accounts.*  The 
extraordinary  budget,  like  a  usurper,  on  the  contrarj^  governs 
only  at  intervals. 


The  Old 
Regime 
Eliminated 
from  this 
Discussion 


The  Ex- 
traordinary- 
Budget 
During  the 
Revolution 


During  the 
Consulate 


History  of  Extraordinary  Budgets  in  France 

Under  the  old  regime  extraordinary  affairs  predominated 
constantly;  it  is  sufificient  to  read  the  tables  inserted  in  the 
works  of  Mallet  and  of  Forbonnais,  the  accounts  of  Necker, 
Calonne  and  Brienne,  in  order  to  appreciate  the  truth  of  the 
above  statement.  We  have  described  this  system  in  detail  in 
a  special  book.^  Let  us,  therefore,  disregard  this  period  when 
budgetary  rules  did  not  exist. 

The  Revolution  was  conducted  almost  exclusively  on  ex- 
traordinary resources.  That  work  takes  account  of  the  billions 
realized  by  the  issue  of  Assignats,  by  the  sale  of  ecclesi- 
astical property,  of  crown-property,  of  the  property  of 
the  emigres  and  of  the  condemned,  by  the  melting  of  bells, 
the  sale  of  spoils  taken  from  churches,  etc.  Let  us  start  at 
the  beginning  of  this  century  [nineteenth]. 

The  official  accounts  of  the  Consulate  and  of  the  Empire 
do  not  appear  to  have  known  extraordinary  budgets.  The 
fiscal  law  submitted  each  year  to  the  legislative  body  had  the 
appearance  of  unimpaired  unity.  But,  besides  the  official  ac- 
counts, an  extraordinary  budget — hidden,  huge  and  handled 
by  Napoleon  himself — soon  rose  under  the  name  of  Extraordi- 
nary Domain.  This  extraordinary  domain,  supplied  through 
victory  and  conquest,  received  the  proceeds  of  contributions 
imposed  upon  vanquished  nations,  contributions  levied  in 
countries  occupied  by  our  armies,  revenues  from  properties' 
of  the  State  situated  abroad,  etc.*  By  means  of  this  fund,  Na- 


^[A  literal  translation  of  this  clause  is:  "but  the  institution  itself 
necessarily  dates  back  to  the  very  foundation  of  accounting."  This 
would  not  seem  to  have  been  meant,  since  accounting  began  long  be- 
fore there  was  any  semblance  of  a  budget.  It  is  assumed  to  be  the 
purpose  of  the  author  to  indicate  that  budget  making  as  an  institution 
rests  on  the  principle  of  accountability,  which  is  an  essential  fact. 
—The  Editor.] 

-  Les  Finances  de  Vancien  regime  et  de  la  Revolution. 

3  See  Les  Finances  de  la  guerre  de  i/p6,  d  1815,  by  M.  De  la  Ru- 
pelle,  in  the  Annates  de  Vecole  des  Sciences  Politiques,  1892  and  1893. 

See  also  the  interesting  article  in  La  Revue  des  questions  his- 
toriques   of   January    i,    1908,    in   which    M.    Henri   de   Grimouard 

236, 


Restoration 


EXTRAORDINARY  BUDGETS 

poleon  endowed  his  generals  and  his  soldiers,  established  a 
war  fund  in  the  cellars  of  the  Ttiileries,  encouraged  industry 
by  loans  made  from  this  war  fund  and  managed  to  conduct 
the  wars  of  France  with  the  balance  of  it.  The  senatus-con- 
sultum  of  January  30,  181  o,  when  speaking  for  the  first  time 
of  the  extraordinary  domain,  limited  itself  to  the  statement: 
"Article  21.  The  Emperor  disposes  of  the  extraordinary  do- 
main." From  the  moment  the  Emperor  himself  disposed  of 
it  the  entire  matter  passed  beyond  the  limits  of  pubHc  ac- 
counting. 

The  Restoration,  which  established  order  in  the  finances,  During  the 
had  no  extraordinary  budget,  in  spite  of  the  expenditures  in- 
volved in  the  liquidation  of  the  debts  of  1814  and  181 5.  The 
payment  of  the  war  indemnity,  the  maintenance  of  the  army 
of  occupation,  the  payment  of  arrears,  etc.,  nearly  always  oc- 
cupied their  regular  places  in  the  general  budget.^  It  goes 
without  saying  that  two  separate  columns  marked  the  distinc- 
tion between  the  permanent  expenditures  and  the  temporary! 
expenditures;  the  general  total  of  the  State  budget,  however, 
combined  these  expenditures. 

Such  was  the  case  in  1823,  when  an  extraordinary  appro- 
priation of  1(30,000,000  francs  was  voted  at  the  l:>eginning  of 
the  year  for  the  purp>ose  of  meeting  the  expenditures  of  a 
war  with  Spain.     In  fact,  the  cost  of  the  expedition  reached 

analyzes  the  operations  of  the  extraordinary  domain  from  1805  to 
1810  on  the  basis  of  documents  of  its  treasurer  de  la  Bouillerie,  which 
were  put  at  his  disposal  and  which  he  utiHzed  with  very  good  results. 

^  By  way  of  exception  the  fiscal  law  of  April  28,  1816,  stipulated: 
"the  budget  is  divided  into  the  ordinary  budget  and  the  extraordinary 
budget."  (Article  16.)  The  revenues  and  the  expenditures  of  the 
ordinary  budget  as  a  result  thereof  were  separated  from  the  opera- 
tions of  the  extraordinary  budget,  without  a  general  total. 

The  law  of  March  25,  1817,  lost  no  time  in  combining  the  ordi- 
nary and  the  extraordinary  budgets  in  a  recapitulation  worded  as 
follows :  "the  expenditures  entered  in  the  three  budgets  mentioned 
in  the  following  articles  (special  budget  of  the  consolidated  debt, 
of  the  sinking  fund,  budgets  of  ordinary  and  extraordinary  expendi- 
tures) and  forming  together  a  total  of  1,069,261,826  francs  shall  be 
paid.  .  .  ."  (Article  21.)  Thus  the  budget  for  1817  ends  with  a 
single  figure. 

In  1818  (law  of  May  15,  1818),  in  1819  (a  law  of  July  14,  1819), 
etc.,  the  same  formula  continued  to  insure  to  the  budget  its  unity.  Be- 
sides all  the  laws  regulating  the  previous  fiscal  periods,  even  the 
period  of  1816,  in  spite  of  the  exceptional  classification  of  its  budget, 
have  totalized  in  a  single  figure  all  expenditures  and  revenues  re- 
gardless of  their  respective  sources. 

237 


THE  BUDGET 

203,476,000  francs,  and  the  excess  over  the  original  100,- 
000,000  francs  was  covered  by  a  loan.  Although  the  Gov- 
ernment was  confronted  by  elements  warranting  the  open- 
ing of  an  extraordinary  budget,  the  general  budget  combined 
all  the  expenditures  of  the  Spanish  War  and  the  regulations 
of  each  branch  of  the  service,  after  having  recapitulated 
the  original  and  supplementary  appropriations,  summing  these 
up  in  a  grand  total.  ^ 

In  1828,  1829  and  1830  the  Government  of  the  Restoration 
provided  by  means  of  extraordinary  resources  ^  for  the  ex- 
penditures on  armament  necessitated  by  the  Oriental  question 
and  by  the  expeditions  to  Morea  and  to  Algiers ;  undoubtedly 
the  section  of  the  budget  bearing  the  heading:  "Expendi- 
tures for  extraordinary  services  to  be  charges  against  the 
special  fund  of  80,000,000  francs,  created  by  the  law  of  June 
19,  1828,"  first  appeared  at  that  time.  But,  even  then, 
the  general  budget,  notwithstanding  this  special  subdivision, 
continued  a  complete  unity. 

The  extraordinary  budgets  began  to  gain  a  foothold  under 
The  July  the  July  Monarchy.  The  law  of  June  27,  1833,  outlined  a 
Monarchy  program  for  "public  works  to  be  continued  or  to  be  under- 
taken" by  creating  for  the  purpose  the  system  of  annexed 
budgets,  according  to  which  a  special  article  of  the  fiscal  law 
would  determine  each  year  not  only  the  figures  of  the  general 
budget,  but  also  the  amount  of  appropriations  for  the  large 
public  works.  An  amendment  of  Pelet  (de  la  Lozere)  sug- 
gested the  combination  which  the  Government  and  the  Com- 
mission accepted,  and  which  the  Chamber  voted  in  the  follow- 
ing terms:  "Article  14.  The  funds  which  may  be  put  at  the 
disposal  of  the  Minister  of  Commerce  and  of  Public  Works 
each  year  shall  form  the  subject  of  the  special  budget  annexed 
to  the  budget  of  the  ministry  in  question."  The  execution 
of  the  law  of  June  27,  1833,  which  was  observed  for  several 

*  It  is  very  true  that  the  law  regulating  the  fiscal  period  1823  stipu- 
lated that  "the  ministers  shall  submit  at  the  next  session  the  account 
of  their  operations  relating  to  the  War  with  Spain."  (A  law  of  May 
21,  1825,  article  4.)  These  operations  were  originally  confused  with 
the  operations  of  the  general  budget. 

2  These  resources  consisted  particularly  of  the  proceeds  of  a  loan 
of  80,000,000,  authorized  by  the  law  of  June  19,  1828,  and  realized 
in  1830  (at  102  francs,  70  centimes,  at  4  per  cent)  through  the  pro- 
ceeds of  an  issue  of  Treasury  Bonds  and  in  the  capture  of  the  Treas- 
ury of  the  Regency  of  Algiers,  which  contained  48,402,241  francs, 
41  centimes,  in  metal  coins. 

238 


EXTRAORDINARY  BUDGETS 

years,  subdivided  in  two  untotalized  parts  the  budgets  for  the 
fiscal  periods  1834,  1835,  1836  and  1837.  The  operations  of 
this  law  were  definitely  closed  at  the  end  of  1839  (Law  of 
June  6,  1840). 

In  general,  the  attempt  of  1833 — which  is  unimportant  so, 
far  as  the  figures  are  concerned  (only  about  14,000,000  francs  The  Law 
per  year  were  involved) — is  ignored  and  the  origin  of  the  °  '  ^^ 
extraordinary  budget  is  attributed  to  the  law  of  May  17,  1837, 
which  involved  more  considerable  allotments  (35,000,000 
to  45,000,000  francs).  This  law  expressed  itself  as  follows: 
"An  extraordinary  fund  intended  for  the  carrying  out  of 
public  works  shall  be  created  outside  of  the  ordinary  budget 
of  the  State."  (Article  i.)  Article  2  charged  the  Treasury 
with  the  task  of  providing  the  special  budgets  with  funds  at 
its  discretion.  This  law  of  1837,  because  of  its  manifestly 
extraordinary  character,  immediately  shocked  those  who  ad- 
vocated budgetary  unity. 

"Your  Commission  .  .  .  opposes  the  law,  of  May  17, 
1837,  because  this  law  is  contrary  to  the  rules  of  account- 
ing ..  .  your  Commission  fears  the  lack  of  control  in   Opposition 
the  determining  of  expenditures.     The  Commission  is   Budget 
alarmed  to  find  that  no  serious  attempt  has  been  made  to   Commission 
provide  ways  and  means  to  meet  the  proposed  expendi- 
'    tures."     (Report  of  M.  Gouin  on  the  budget  for  1840, 
June  29,  1839.)    "These  considerations,"  the  report  adds, 
"were  communicated  to  the  Minister  of  Finance,  who  ad- 
mitted the  correctness  of  the  principles  of  order  and  of  ac- 
counting as  accepted  by  the  majority." 

The  law  of  June  6,  1840,  regulating  the  budget  of  1837, 
stipulated  that: 

"The  extraordinary  funds  created  by  articles  i  and  2 
•  of  the  law  of  May  17,  1837,  for  the  carrying  out  of  pub- 
lic works,  and  the  appropriations  made  by  the  annual 
fiscal  laws  or  by  special  laws  for  the  purpose  of  meeting 
the  expenditures  caused  by  these  public  works  are,  and 
shall  be,  combined  with  the  ordinary  budget  of  the  State.'* 
(Article  i  of  the  law  of  June  6,  1840.*) 

^  The  same  law  of  June  6,  1840,  also  declared  the  closing  of  the 
annexed  budgets  which  were  established  in  1833:  "the  special  budget 

239 


THE  BUDGET 


Items 
Placed  in 
Ordinary- 
Budget 


An  Ex- 
traordinary 
Budget  to 
Be  Met  by 
Loans 


The  extraordinary  budgets  of  1837  existed  for  only  two 
years,  and  the  arguments  set  forth  urging  their  abolition 
proved  conclusively  that  proper  theories  of  public  accounting 
inspired  the  decision  of  the  Chambers.^ 

They  were  placed  in  the  ordinary  budget  of  the  ministry 
of  public  works,  in  a  second  section  which  has  survived 
through  association  with  the  extraordinary  budget,  when  the 
latter  had  been  reestablished.  This  second  section  of  the 
ordinary  budget  of  public  works  and  then  another  section 
similar  in  character  opened  in  the  budgets  of  the  ministries 
of  war  and  navy  were  supposed  to  provide  for  all  expendi- 
tures on  all  large  works  based  on  the  law  of  June  23, 
1841.2 

The  law  of  June  11,  1842,  "relating  to  the  establishment 
of  large  railroad  lines,"  superimposed  itself  upon  the  orga- 
nization created  by  the  law  of  1841,^  without  modifying 
it.*     The  law  of  1842  established  an  extraordinary  budget, 


established  by  the  law  of  June  27,  1833,  shall  be  balanced  and  defi- 
nitely closed  at  the  expiration  of  the  fiscal  period  1839."  (Article 
16.) 

^  The  reports  of  the  Commissions  of  the  Chamber  of  Deputies  of 
M.  Duprat  and  of  the  Chamber  of  Pairs  of  M.  de  Cambaceres  ex- 
pressly declared  that  the  extraordinary  budgets  upset  the  order  and 
the  clearness  of  the  general  system  of  finances,  favored  dangerous 
irregularities  and  abusive  shiftings  of  appropriations,  etc.  The  ex- 
penditures are  incurred  without  limit,  without  any  serious  examina- 
tion and  without  estimating  the  resources  by  which  these  expendi- 
tures have  to  be  covered.  "On  the  basis  of  these  motives  the  aboli- 
tion of  the  extraordinary  budget  was  demanded.  This  desire  was 
heeded  by  the  government.  Thus  the  budgetary  unity,  which  is  in 
the  interest  of  the  order  in  our  finances,  shall  be  reestablished."  (Jan- 
uary 19  and  June  i,  1840.) 

2  The  law  of  June  23,  1&4.1,  declared:  "The  appropriations  made  for 
extraordinary  works  authorized  by  the  above  articles  shall  form  the 
object  of  a  distinct  section  and  of  a  special  series  of  chapters  in  the 
budgets  of  the  ministries  of  public  works,  of  war,  and  of  the  navy." 
(Article  5.) 

^  The  law  of  June  23,  1841,  and  the  law  of  June  11,  1842,  correla- 
tively  controlled  all  the  large  works  of  the  last  period  of  the  July 
Monarchy,  including  a  program  of  expenditures  of  more  than  one 
and  a  half  billions,  the  carrying  out  of  which  involved,  in  February, 
1848,  almost  one  billion  of  actual  expenditures. 

*  Beginning  with  the  fiscal  period,  1844,  inclusive,  the  second  sec- 
tion of  the  ordinary  budget  of  the  ministry  of  public  works  was 
divided  into  two  parts:  (i)  Extraordinary  works  authorized  by  the 
law  of  June  23d,  1841 ;  (2)  works  on  the  large  railroad  lines  author- 
ized by  the  law  of  June  nth,  1842. 


240 


EXTRAORDINARY  BUDGETS 

but  it  did  not  even  undertake  to  assign  special  resources  to 
cover  the  new  expenditures  outlined  in  the  program;  only  a 
series  of  appropriations  to  be  met  by  funds  obtained  through 
the  floating  debt  ^  was  allowed ;  this  became  the  cause  of  most 
serious  troubles  at  the  end  of  the  July  Monarchy,  and  was 
the  reason  that  the  overburdened  floating  debt  failed  to  pass 
intact  through  the  crisis  of  the  Revolution. ^ 

The  first  years  of  the  Second  Empire  showed  a  great  deal 
of  regularity  from  our  point  of  view.  Thus,  the  expenditures 
of  the  Crimean  War  of  1854  and  1855,  and  those  of  the  war 
with  Italy  in  1859,  were  regularly  included  in  the  general 
budget  which  they  swelled  beyond  all  measure.^ 

In  1862,  however,  the  attempt  of  1837  was  renewed  in  a 
more  complete  and  substantial  way: 


"There  shall  be  created  outside  of  the  ordinary  budget 
of  the  State  a  fund  designated  specially  to  meet  the  ex- 
penditures of  the  extraordinary  budget.  This  fund  shall 
be  determined  each  year  by  the  law  authorizing  the  expen- 
ditures to  which  the  fund  shall  be  assigned."  (Fiscal 
law  of  July  2,  1862,  article  i.) 


Attempt  to 
Reestablish 


Here  we  find  the  characteristic  features  attributed  to  the  Reappear- 

extraordinary  budgets :  first,  the  putting  aside,  the  isolation,  ^J^^  °* 

pronounced  in  an  absolute  manner  by  the  first  words;  then,  istic'^Fea^-^ 

the  arrangement  of  a  portion  of  related  revenues  and  expendi-  tures 


1  The  law  of  Jiine  nth,  1842,  Article  18,  reads  as  follows:  "ex- 
penditures, authorized  by  the  present  law,  which  have  to  be  charged 
against  the  State,  shall  be  met  by  means  of  resources  drawn  from 
the  floating  debt." 

2  M.  Thiers  in  a  remarkable  speech  delivered  in  January,  1848, 
recapitulated  in  a  very  captivating  way  the  operations  of  extraordi- 
nary works  of  the  last  eight  years  of  the  July  monarchy  and  empha- 
sized the  dangers  which  were  undoubtedly  more  imminent  than  he 
thought  them  to  be. 

^  The  following  statistics,  taken  from  the  general  financial  account, 
show  the  great  increase  of  the  budget  resulting  from  the  incorpora- 
tion of  the  expenditures  of  the  wars  of  the  Crimea  and  with  Italy: 

Total  of  the  Budget  of  Expenditures : 

1853  1,547,000,000  francs 

1854  1,988,000,000   " 

1855  2,399,000,000  " 
1857  1,892,000,000  ** 
1859  2,207,000,000  ** 
i860       2,084,000,000   ** 


241 


THE  BUDGET 

/"  tures  intended  to  create  the  new  budgetary  equilibrium.  The 
(  Government  desired  above  all  to  conceal  the  increase  of  pub- 
lic expenditures  by  dividing  their  totals.^  This,  in  reality, 
is  always  the  purpose  underlying  the  separation  of  the  ex- 
traordinary budgets:  they  are  made  to  delude  the  country. 
As  always,  however,  some  theoreticians  have  attempted  to 
justify  them  in  the  name  of  public  interest  and  of  adminis- 
trative logic;  they  claim  that  the  customary  expenditures  of 
the  country  should  not  be  confused  with  extraordinary  ef- 
forts; in  view  of  the  fact  that  future  generations  will  profit  by 
the  expenditures  made  for  their  benefit,  nothing  is  more  just 
than  to  draw  up  a  separate  account  of  these  expenditures  and 
to  fund  them,  not  by  means  of  taxes,  but  by  means  of  loans, 
the  interest  on  which  shall  equally  burden  the  present  and  the 
future,  etc.  M.  Magne,  Minister  of  Finance,  spoke  as  fol- 
lows in  his  most  persuasive  way: 

Arguments  "In  general,  very  little  attention  is  paid  to  the  func- 

Supporting  ^-Qj^g  q£  ^j^g  g^^^g     ^\{\\^  the  State  is  supposed  to  bal- 

ance its  current  expenditures  with  its  ordinary  resources, 
...  it  is  a  property  owner  and  has  movable  and  immov- 
*able  assets  which  it  is  obliged  not  only  to  maintain,  but  to 
improve  in  the  interests  of  the  community  as  well  as  the 
individual.  When  the  State  procures  for  itself  some  re- 
source in  an  extraordinary  way,  by  means  of  loans,  and 
fixes  this  resource  in  a  definite  kind  of  expenditure,  the 
State  has  made  an  investment — a  transformation  of 
values ;  it  has  increased  its  immovable  and  movable  assets 
as  well  as  the  movable  and  immovable  assets  of  every- 
body. .  .  .  There  is,  therefore,  good  logic  not  to  confuse 
these  two  kinds  of  expenditure,  those  which  disappear 
and  leave  to  the  future  neither  charges  nor  benefits;  and 
those  which  consolidate  themselves  with  and  become  part 
of  the  soil  and  thus  increase  the  wealth  of  the  State." 
(Legislative  Body,  April  6,  1869.) 

We  shall  later  discuss  these  special  arguments. 

The  deputy  who  reported  on  the  law  of  July  2,  1862,  again 
enumerated  all  the  matters  which  were  intended  to  compose 
the  new  section  of  the  budget. 

^  For  the  same  purpose  of  segregating  the  ordinary  budget,  the  law 
of  July  2d,  1862,  also  established  the  budget  on  special  resources,  of 
which  we  shall  speak  later  on. 

242 


EXTRAORDINARY  BUDGETS 

*'The  extraordinary  expenditures  include  large  public 
works,  new  constructions,  temporary  increases  of  our  mil- 
itary force  necessitated  by  the  protection  of  our  inter- 
ests abroad.  In  a  word,  the  extraordinary  expenditures 
shall  contain  everything  which,  answering  the  needs  of 
the  moment  and  intended  to  disappear,  is  not  included 
among  the  permanent  expenditures."  (Report  of  June  3, 
1862.) 

*  After  the  events  of  1870-1871,  the  extraordinary  budget,   Again 
established    in    1862,    was   alx>lished.      Thiers,   who  was    in   ^bohshed 
charge  of  the  finances,  could  not  possibly  have  intended  to 
uphold  a  budgetary  subdivision,  the  abuses  of  which  under 
the  Empire  he  had  condemned  with  so  much  ardor. 

*'We  all  knew  twenty  or  thirty  years  ago  what  our 
situation  was,"  he  said ;  *'one  had  only  to  look  at  the  first 
page  of  the  budget  to  know  all  the  expenditures,  even  the 
extraordinary  ones  and  all  the  revenues.  Even  the  most 
ignorant  and  the  least  attentive  were  aware  of  the  situa- 
tion. However,  since  our  budget  has  been  divided  into 
several  budgets,  it  has  become  very  difficult  to  find  one's 
way  through  them.  .  .  .  There  is  only  one  thing  that  is 
sincere,  useful  and  which  brings  real  benefit,  that  is,  ta  j 
have  all  the  expenditures  of  the  State,  even  the  extraor- 
dinary ones,  entered  on  one  single  table ;  all  the  revenues 
shall  be  entered  on  another  single  table;  then  the  situa- 
tion is  clear."  ^  (Speech  of  M.  Thiers,  Legislative  Body, 
July  3,  1863.) 

While   the  opening  of  a  liquidation-account,   as  a  result  The 
of  our  disasters,  seemed  to  be  exceptionally  justified,  the  Na-   Liquidation- 
tional  Assembly  intended  to  close  it  as  soon  as  possible.    This, 
however,  was  a  delusion  because  the  first  liquidation-account; 

^  In  1871  Thiers  thus  branded  the  budgets  of  the  Empire:  "What 
were  the  budgets  of  the  Empire?  Well,  gentlemen,  the  secret  of 
submitting  the  budgets  under  the  Empire  was  to  divide  the  true 
budget — the  only  true  budget  is  the  budget  which  includes  all  the  ex- 
penditures of  the  State — the  secret  of  the  submitting  I  said  was  to 
divide  the  budget  into  several  parts  so  as  to  render  the  totaling  up 
difficult  or  at  least  laborious  and  thus  to  deceive  the  country  as  to 
the  nature  and  the  extent  of  the  expenditures  which  the  country  had 
to  make.      (Right,  that's  true.)"      (National  Assembly,  June  20th, 

1871.) 

243 


THE  BUDGET 


Not  a 
Complete 
Return  to 
the  Old 
Practice 


of  1872,  was  to  be  succeeded  by  a  second  in  1876,  and  this  in 
turn,  in  1878,  by  a  budget  of  extraordinary  resources. 

The  first  part  of  the  liquidation-account,  from  1872  until 
1875 — devoted  almost  exclusively,  in  conformity  with  the 
stipulations  of  its  organization,  to  the  repairing  of  our  losses 
and  the  rebuilding  of  our  military  forces — amounted  to  827,- 
500,000  francs.  This  was  charged  against  the  resources  ac- 
cruing from  a  portion  of  a  loan  to  the  Treasury  by  the  Bank 
of  France,  against  the  surplus  of  revenues  from  the  budget 
for  1869  and  the  proceeds  of  bonds  of  the  Army  Endow- 
ment Fund,  and  of  the  Sinking  Fund,  etc.  The  second  part 
of  the  liquidation-account — from  1876  to  1878,  devoted  to 
the  reestablishing  of  our  military  and  naval  equipments — 
amounted  to  1,104,161,000  francs.  Its  principal  credit  source 
came  from  the  issue  of  six-year  bonds. 

In  1879,  before  the  closing  of  the  second  Hquidation-ac- 
count,  a  like  section  was  added  to  the  ministry  of '  public 
works;  this  section  bore  the  heading:  "Expenditures  to  be 
charged  against  extraordinary  resources  of  the  budget,"  that 
is,  against  the  proceeds  of  thirty-year  obligations  created  by 
the  law  of  December  26,  1876.  This  was,  however,  not  as 
yet  an  extraordinary  budget.  The  liquidation-accounts  them- 
selves did  not  seem  to  have  this  character,  or,  at  least,  they 
form  an  exception  to  the  classification,  which  we  can  ignore.^ 
The  one  as  well  as  the  other,  however,  became  the  fore- 
runner of  the  great  innovation  of  1878.^ 

Then,  a  real  extraordinary  budget  was  established  in  our 
budgetary  accounting.  Already  the  law  of  June  11,  1878,  had 
created  the  3  per  cent  sinking  fund  bond.     The  law  of  De- 

^  M.  Leon  Say,  however,  said  in  1882 :  "The  first  liquidation-ac- 
count was  nothing  but  a  budget  based  on  extraordinary  resources, 
and  I  believe  that  the  budget  which  I  am  presenting  to  you  today 
does  not  differ  very  much  from  the  point  of  view  of  its  form  and 
of  the  principles  of  public  accounting  from  the  extraordinary  budget 
which  we  had  then."  (Expressions  of  assent.)  (Chamber  of  Depu- 
ties, session  of  July  27th,  1882,  speech  of  the  Minister  of  Finance.) 

2  M.  Paul  Boiteau  in  his  article  on  the  general  budget  of  the  State 
in  the  DicHonnaire  des  finances  endeavors  to  show  that  the  budget 
on  extraordinary  resources  established  in  1878  was  not  the  continua- 
tion of  the  liquidation-account,  but  only  the  extension  or  rather  the 
separation  of  the  appropriations  of  the  second  section  of  the  ministry 
of  public  works.  "If  the  extraordinary  budget  seems  to  be  the  result 
of  the  liquidation-account,  its  affiliation  is  not  based  on  anything  but 
on  the  fact  that  the  liquidation-account  ceased  to  exist  the  moment 
the  extraordinary  budget  was  established." 

244 


EXTRAORDINARY  BUDGETS 


cember  2.2,  1878,  which  determined  the  budget  for  1879, 
did  not  ordain  in  a  solemn  way  the  opening  of  an  extraordi- 
nary budget  and  did  not  specify  the  innovation  in  any  of  its 
articles.^  The  law  limited  itself  to  putting  it  into  practice,  by 
including  among  its  sections  a  new  one  under  the  heading: 
''Budget  of  Expenditures  to  be  Charged  Against  Extraordi- 
nary Resources." 

Later,  the  budget  of  extraordinary  resources,  instead  of 
continuing  to  form  a  section  of  the  fiscal  law,  constituted 
openly  in  1887,  1888  and  1889  a  special  law  in  itself.  From 
the  first  this  budget  had  its  own  total,  which  was  not  added 
in  any  recapitulation  to  the  totals  of  other  budgets.  This 
was  the  extraordinary  budget,  such  as  we  have  described 
above,  and  such  as  might  be  defined,  on  the  basis  of  these 
historical  data,  as  follows:  *'The  extraordinary  budget  pro- 
vides, outside  of  the  scope  of  the  ordinary  budget,  for  ex- 
ceptional expenditures  of  the  State.'* 


Occasions 
on  Which 
Extraor- 
dinary 
Budgets 
Have 
Latterly 
Been  Used 


Definition 
of  Same  as 
Now  Used 
in  France 


Discussion  of  the  Merits  of  Extraordinary  Budgets 

It  is  not  advisable,  in  order  to  gain  an  understanding  of 
extraordinary  budgets,  to  discuss  their  merits,  to  examine  into 
the  reasons  for  and  against  their  existence  or  to  consider 
them  en  bloc;  they  are  composed,  or  may  be  composed,  of 
too  many  elements.  It  is  necessary,  therefore,  to  classify 
these  elements.  For  this  purpose,  the  expenditures  of  ex- 
traordinary budgets  may  be  divided  into  necessary,  optional 
and  abusive. 


Necessary  Expenditures  Authorised: 
essary  expenditures  ?  ^ 


First,  what  are  nec- 


^  If  no  new  regulation  had  accompanied  the  creation  of  the  budget 
on  extraordinary  resources,  it  could  not  be  said  that  the  establishing 
of  it  was  surreptitious.  On  the  contrary,  it  caused  important  discus- 
sions, first  with  regard  to  the  law  of  June  nth,  1878,  when  the  ques- 
tion arose  of  establishing  "a  financial  instrument  intended  to  meet 
large  public  works  which  the  Government  proposed  to  carry  out  in 
a  period  of  15  years."  (Statement  of  supporting  arguments  of  Febru- 
ary 7th,  1878),  and  then  at  the  time  of  the  discussion  of  the  general 
budget  for  1879,  in  December  1878. 

2  The  quotations  which  follow  cannot  be  suspected  of  partiality, 
because  they  are  taken  from  a  speech  of  a  protagonist  of  the  ex- 
traordinary budget.  (Speech  of  M.  de  Freycinet,  Senator,  in  reply  to 
M.  Buffet,  session  of  March  3,  1885.) 

_        245  _      , 


Funds 
Needed  to 
Meet  Great 
Emergencies 


A  Mistaken 
Notion  that 
such  Occa- 
sions Neces- 
sitate 
Extraor- 
dinary 
Budgets 


THE  BUDGET 

'There  are  times  in  the  history  of  nations  when  it  is 
impossible  to  meet  certain  expenditures  by  means  of  the 
ordinary  budget.  Necessary  expenditures  are  those  which 
result  from  events  beyond  the  power  of  a  nation  to  con- 
trol— or,  at  least,  the  financial  consequences  of  which  can- 
not be  escaped — as,  for  example,  the  war  of  1870  and 
the  enormous  burdens  laid  on  the  country." 

Thus,  the  first  category  is  well  defined.  Imperative  neces- 
sities, such  as  resulted  from  the  war  of  1 870-1 871,  compelled 
the  establishing  of  the  extraordinary  budget.  In  that  way 
we  have  excused  the  liquidation-account  of  1872.  This  ac- 
count, however,  while  excusable,  was  unnecessary.  It  appears 
to  us  that  it  would  have  been  better  had  it  never  been  estab- 
lished; that  it  was  not  free  from  grave  consequences.  If  the 
State,  in  case  of  war,  finds  itself  compelled  to  resort  to  ex- 
traordinary measures,  if  the  State  is  compelled  to  provide 
funds  outside  of  the  resources  of  its  ordinary  budget,  this 
can  be  done  without  resort  to  an  extraordinary  budget.  Thus, 
during  the  very  years  of  1870  and  1871,  the  costs  of  the  war 
were  included  in  the  general  budget,  which  in  that  way  re- 
mained unified  in  spite  of  the  events;  its  figures  rose,  of 
course,  to  an  enormous  total.^  In  the  same  way,  the  Cri- 
mean and  Italian  wars,  although  they  occasioned  exceptionally 
heavy  loans,  required  no  extraordinary  budgets.  In  this  con- 
nection, the  word  necessary  must  be  eliminated. 

Furthermore,  it  may  happen — and  it  has  happened,  not  in 
our  country  but  nearby — that  a  great  crisis  may  occur  without 
necessitating  extraordinary  resources.  Theorists  and  states- 
men have  thought  that  under  such  circumstances  taxation 
alone  should  supply  the  treasury  with  funds,  both  in  the  in- 
terest of  the  finances  of  the  country  and  in  the  interest  of 
the  moral  side  of  the  problem.  We  have  Gladstone's  utter- 
ance on  the  subject,^  and,  what  is  better  still,  during  the 

^  The  budgets  of  1870  and  of  1871  show  according  to  the  laws  of 
regulation  the  following  figures: 

Fiscal  Period  1870 3,430,130,000  francs 

1871 3,374,792,000       " 

1872 2,948,029,000       " 

2  "The  expenditures  of  war,"  said  Mr.  Gladstone,  "are  the  moral 
check  which  the  Almighty  has  imposed  upon  the  ambition  of  con- 
quests .  .  .  the  necessity  of  providing  year  after  year  for  the  burdens 
which  the  war  imposes  is  the  natural  and  sure  corrective  of  war 
enthusiasm."    (March  7,  1853.) 

246 


EXTRAORDINARY  BUDGETS 


course  of  his  administration,  in  1854  and  1855,  the  costs  of 
the  Crimean  War  were  almost  exclusively  ^  paid  by  means 
of  tax  increases.  After  his  retirement  from  office,  a  loan, 
of  course,  paid  England's  balance  of  the  cost  of  the  war. 
While  we  contracted  a  loan  of  1,600,000,000  francs  for  the 
Crimean  War,  our  allies,  who  spent  much  more  than  we, 
demanded  but  655,000,000  from  the  Consolidated  Debt  and 
250,000,000  in  bonds  from  the  Exchequer  for  the  same  ex- 
pedition. Still  more  recently,  during  these  last  years,  Eng- 
land has  paid  through  taxation  almost  the  entire  cost  of  the 
wars  of  Afghanistan,  of  Egypt,  of  Bechuanaland,  etc.  Even 
the  South  African  War  did  not  cause  them  to  resort  to  an 
extraordinary  budget;  its  enormous  expenditures,  however, 
swelled  the  general  budget,  which  amounted  to  4,700,000,000 
francs  for  the  fiscal  year  1 901 -1902. 

Again  the  term  necessary  is  not  justified. 

Optional  Expenditures  Authorized:  Optional  expendi- 
tures "are  essentially  equivalent  to  expenditures  for  pub- 
lic works.  I  call  those  expenditures  optional  because 
they  do  not  impose  themselves  inevitably.  The  Govern- 
ment is  never  absolutely  compelled  to  make  expenditures 
for  public  works,  and,  above  all,  it  is  not  compelled  to 
make  them  within  a  fixed  period  of  time.  The  Govern- 
ment can,  in  this  connection,  extend  the  limit  of  time, 
which  it  has  outlined  for  itself,  in  such  a  way  that  the 
expenditures  contemplated  in  the  extraordinary  budget 
become  optional  with  regard  to  the  totals  fixed  for  them." 

War  and  public  works  are,  in  fact,  the  two  customary  bene- 
ficiaries of  the  extraordinary  budget;  the  expenditures  for 
purposes  of  war  are  necessary;  those  for  public  works  are 
optional. 

The  latter  are  most  elastic;  they  can  be  extended  or  con- 
Adam  Smith  said:     "The  people  who  during  the  course  of  a  war 
feel  the  burden  very  soon  tire  of  it." 

^  M.  Paul  Leroy-Beaulieu  in  his  Traite  de  la  science  des  finances, 
after  having  analyzed  the  financial  measures  taken  by  England  for 
the  purpose  of  balancing  the  expenditures  of  the  Crimean  War,  shows 
that  it  would  be  an  exaggeration  to  afiirm,  as  some  writers  have  done, 
that  its  expenditures  were  entirely  covered  by  taxation.  This  very 
instructive  treatise  does  not  fail,  however,  to  admire  the  wise  admin- 
istration of  the  British  Government  which  reduced  to  a  minimum 
the  part  which  the  loan  had  in  settling  the  expenditures  of  the  war. 

347 


England 
Met  Such 
Expendi- 
tures by 
Taxation 


Confined  to 

Public 

Works 


The 
Amount 
and  the 
Time  Dis- 
cretionary 


THE  BUDGET 

tracted,  according  to  the  whim  of  those  in  power.  This  can 
be  seen  by  following  the  fluctuations  of  appropriations  al- 
lotted in  the  extraordinary  budgets  for  public  works  since 
1878;  they  begin  with  237,745,000  francs  in  1879,  reach  a 
maximum  of  539,221,000  in  1881 ;  then  fall  off  to  134,599,000 
in  1887,  and  disappear  in  1888  because  in  that  year  public 
works  were  (definitely  excluded  from  extraordinary  budgets.^ 

"The  expenditures  for  public  works,"  said  the  state- 
ment of  supporting  arguments  for  the  revised  budget  of 
1888,  "have  been  classified  in  the  budget  of  extraordinary 
resources  as  far  as  they  manifestly  have  the  character 
of  expenditures  for  original  construction  or  development, 
of  temporary  and  not  of  permanent,  of  exceptional  and 
not  of  normal  expenditures.  The  balance  of  extraordi- 
nary expenditures  for  public  works  now  seems  to  assume 
a  new  aspect  ...  we  did  not  hesitate  to  attach  it  to  the 
ordinary  budget."  (Plan  of  July  5,  1887,  submitted  by 
M.  Rouvier,  Minister  of  Finance.) 

Should  Being  optional  in  character  by  no  means  compels  classi- 

ExtraoV"      fication  in  the  extraordinary  budget.    If  preserved  in  the  gen- 

dinary  eral  budget  itself,  the  large  exceptional  works  undoubtedly 

Budget  would  have  temporarily  increased  the  total  of  expenditures; 

but  subsequently  their  gradual  decreases  and  their  abolition 

would  have  put  matters  in  proper  balance  after  having  caused 

only  harmless  fluctuations  in  lieu  of  a  real  disturbance,  such 

as  an  extraordinary  budget  would  have  occasioned. 

Unjustifiable  Expenditures  Authorized:    Finally,  expendi- 
tures classified  as  unjustifiable  remain  to  be  considered. 

"I  classify  as  unjustifiable  all  expenditures  which  should 
not  find  a  place  in  the  extraordinary  budget.    If  the  ex- 
traordinary budget  is  but  a  subterfuge  to  increase  the  re- 
sources of  the  ordinary  budget  in  a  roundabout  way,  I  * 
consider  that  all  expenditures  included  for  such  reason 

^  We  say  "disappear,"  considering  only  the  budget  of  extraordinary 
resources,  because  a  large  portion  of  the  old  expenditures  continues 
to  run  by  means  of  appropriations  entered  under  the  heading  of  the 
second  section  of  the  ordinary  budget  and  by  means  of  combining 
contributions  (fonds  de  concours)  furnished  by  railroad  companies 
by  virtue  of  agreements  of  1883  and  by  various  other  interested 
parties. 

^48 


EXTRAORDINARY  BUDGETS 

are  improper  and  should  disappear.  The  extraordinary 
budget  should  not  serve  as  a  cloak  for  unwarranted  ex- 
penditures which  the  government  fears  to  enter  in  the 
ordinary  budget  to  which  they  belong  because  of  their 
nature." 


It  is  in  this  connection  that  extraordinary  budgets  reveal 
their  dangerous  character.  No  exact  line  of  demarcation,^ 
however,  can  be  drawn  between  the  ordinary  and  extraordi- 
nary budget;  these  two  words  have  not  as  yet  found  a  defi- 
nition in  the  rules  of  accounting.  Everyone  thinks,  there- 
fore, that  he  has  a  perfect  right  to  shift  the  limit  according 
to  his  theories  or  to  serve  his  interests.  ''The  expenditures 
are  ordinary,"  Leon  Say  always  said,  "when  the  Commission 
on  Budget  declared  them  to  be  ordinary;  they  become  ex- 
traordinary when  the  Commission  defined  them  as  such."  ^ 
This  is  a  question  of  arbitrary  decision. 


The  Ex- 
traordinary 
Budget 
Opens  the 
Way  to 
Subterfuge 


^  With  reference  to  the  Navy,  the  deputy  reporting  on  the  budget 
precisely  says  as  follows:  "In  the  nature  of  things,  as  far  as  the 
Navy  is  concerned,  the  ordinary  budget  and  the  extraordinary  budget 
are  'connected  and  complete  each  other.  .  .  .'  No  line  of  demarcation 
is  drawn  between  these  two  kinds  of  expenditures  .  .  .  the  rebuilding 
of  the  fleet,  the  replacing  of  antiquated  types  by  modern  types  is  a 
permanent  obligation  which  logically  has  to  be  met  by  the  ordinary 
resources  resulting  from  taxation."  (Report  of  deputy  Menard- 
Dorian,  October  25th,  1887.) 

In  the  same  way  with  regard  to  the  budget  of  the  Ministry  of  War, 
the  deputy  reporting  stated  "that  the  amounts  allotted  to  the  ex- 
traordinary budget  apply  to  the  same  chapters  as  the  ordinary  appro- 
priations: stores,  accouterments,  artillery,  uniforms,  hospitals,  etc., 
and  that  the  temptation  to  pay  with  the  funds  of  the  one  the  expendi- 
tures of  the  other  must  be  very  great."  (Report  of  Senator  Loubet, 
February  14,  1887.) 

2  M.  Leon  Say,  Minister  of  Finance :  "Honorable  M.  Rouvier  said 
yesterday  that  he  sees  no  way  to  distinguish  between  the  ordinary 
expenditures  and  the  extraordinary  expenditures  other  than  by  the 
vote  of  the  Commission  on  Budget  and  that  the  expenditures  are  ordi- 
nary when  the  Commission  has  declared  them  to  be  such  and  ex- 
traordinary when  they  are  classified  as  extraordinary." 

M.  Maurice  Rouvier:  "This  is  not  my  theory.  I  only  say  that 
because  I  heard  M.  Ribot  say  so/' 

The  Minister  of  Finance:  "I  beg  your  pardon,  because  M.  Ribot 
has  denied  that  such  is  his  theory.  I  had  to  fix  it  on  you,  otherwise 
this  would  be  nobody's  theory."  (Laughter.)  (Chamber  of  Deputies 
session  of  July  27th,  1882.)  Without  searching  further  for  the  origin 
of  this  statement,  we  must  admit  that  unfortunately  ordinary  and 
extraordinary  expenditures,  through  the  lack  of  every  regulation  on 


249 


THE  BUDGET 


Temptation 
to  Abuse 


Excuses 
Offered 


From  lack  of  dividing  lines,  there  follows  the  almost  ir- 
resistible temptation  to  charge  ordinary  expenditures  to  the 
extraordinary  budget,  which  is  supplied  with  funds  by  loan 
and  displays  more  hospitality  than  its  associate,  which  is  pro- 
vided with  funds  by  taxatioi^  The  extraordinary  budget  re- 
ceives all  expenditures  charged  to  it.  It  does  not  put  the 
limit  of  non-recevoir  to  any  expenditure,  because  it  can  be 
extended  at  will.  The  mass  of  projects  which  clamor  for 
inclusion  in  the  extraordinary  budget  nearly  always  succeed 
in  being  so  incorporated. 

In  1882,  M.  Leon  Say,  Minister  of  Finance,  was  able  to 
suggest  the  reintroduction  to  the  ordinary  budget  of  73,- 
497,038  francs  of  expenditures,  which  in  an  irregular  way 
had  been  entered  in  the  extraordinary  budget.^  Until  then, 
73»500»ooo  francs  of  expenditures,  classed  as  improper  in 
accordance  with  the  preceding  definition,  had  been  carried  in 
the  extraordinary  budget. 

The  ministers  themselves,  as  a  matter  of  fact,  have  ad- 
mitted at  times  the  abuses  which  they  were  about  to  commit, 
excusing  themselves  in  advance  on  account  of  the  necessity. 
A  statement  of  supporting  arguments,  for  a  plan  to  acquire 
land  and  start  a  colonization  scheme  in  Algiers,  declares 
openly  that  it  would  suggest  an  irregular  charge  of  37,500,- 
000  francs  against  the  extraordinary  budget,  because,  as  this 
statement  of  supporting  arguments  admits,  "the  ordinary 
budget  is  unfortunately  unable  to  stand  such  a  considerable 
increase.  We  have,  therefore,  suggested  that,  until  it  shall 
be  possible  to  proceed  in  a  regular  manner,  this  amount  be 
charged  against  the  resources  of  the  extraordinary  budget." 
(Bill  of  July  18,  1882.)  In  1882  seven  ministries — Interior, 
Posts  and  Telegraphs,  War,  Navy,  Colonies,  Public  Instruc- 
tion and  Fine  Arts,  Agriculture  and  Public  Works — succeeded 
in  participating  in  the  allotments  of  the  extraordinary  budget. 

the  subject,  are  distinguished  in  the  first  place  by  individual  com- 
ments. 

^  The  minister  attempted  to  mitigate  the  irregularity  committed  by 
his  predecessors:  *'We  do  not  have  to  ask  ourselves,"  he  said, 
"whether  it  is  an  extraordinary  expenditure  which  is  renewed  at 
undetermined  intervals  or  whether  it  is  an  expenditure  made  once: 
we  have  to  ask  ourselves  whether  from  the  point  of  view  of  good 
financial  order,  and  of  exact  distribution  of  burdens  among  the  pres- 
ent and  future  generations,  the  expenditure  shall  be  charged  against 
the  taxation  account."  In  fact  only  52,000,000  were  taken  off  from 
the  extraordinary  budget. 

250 


EXTRAORDINARY  BUDGETS 

Each  of  the  ministries  successively  acquired  this  privilege 
under  some  plausible  pretext  and  was  helped  by  the  abundance 
of  funds.  While  these  intruders  have  been  expelled,  the 
abuse  itself  abides  and  is  inherent  in  the  nature  of  the  insti- 
tution; its  reappearance  must  always  be  dreaded. 

The  annual  reports  of  the  Cot^r  des  Comptes  have  not 
failed  to  reveal  the  multitude  of  attempts  at  encroachments, 
particularly  in  the  chapter  under  the  heading,  Shiftings  of 
expenditures  from  one  budget  to  another.  They  have  pointed 
out  the  constant  practice  of  charging  against  the  funds  of 
the  extraordinary  budget  of  notoriously  regular  expenditures, 
such  as:  gratuities  to  employees  of  the  central  administra- 
tion, purchases  of  books  for  the  library,  subsidies  to  widows, 
rewards  distributed  among  the  agents  of  the  Ministry  in 
Paris  on  the  national  holiday  of  July  14,  carpenters'  work, 
subscription  for  telephone  service,  printing  work,  supplying 
of  mineral  oils  for  lighthouses,  etc.^  The  administration  in 
its  replies  confessed  the  fact  of  irregularity;  then  did  the 
same  things  again  the  next  year,  only  to  make  similar  excuses. 

Extraordinary  budgets,  as  we  have  seen,  exercise  a  mag- 
netic influence  on  the  ordinary  budget,  tending  to  disorganize 
it.  Loans  and  taxation  coincidently  cover  expenditures  which 
taxation  alone  should  defray,  and  the  principles  of  economy 
disappear  in  this  confusion.  We  shall  later  find  new  proofs 
of  this.  Precisely  these  abuses  eventually  brought  about 
the  abolition  of  the  extraordinary  budget,  suggested  in  the 
budget  plan  for  1887,  drafted  by  M.  Sadi-Carnot.  While 
this  suggestion  passed  unheeded,  as  well  as  a  renewal  of  it  in 
the  budget  plan  for  1888,  it  finally  triumphed  as  a  result  of 
persistent  recommendations  of  the  legislative  commission: 

"Your  Commission  renews  this  year  the  plea  suggested 
by  the  preceding  Commission  in  favor  of  an  abolition  of 
the  budget  on  extraordinary  resources  within  the  shortest 
possible  period."  (General  Report  of  the  Deputy,  Jules 
Roche,  June  30,  1885.) 


Evils 
Pointed 
Out  by  the 
Cour  des 
Comptes 


Efforts 
to  Have 
Practice 
Discon- 
tinued 


In  1889  the  budget  on  extraordinary  resources  was  limited 
to  expenditures  for  war.  It  even  lost  for.  a  while  its  name 
and  was  called :  "Extraordinary  budget  of  war  for  the  fiscal 
period  .  .  .  (new  endowment)."  However,  as  the  hook  might 
some  day  serve  as  a  point  of  attachment  for  an  entire  ex- 


See  Chapter  XXVIII. 


251 


In  iSg9 
Limited  to 
Exigencies 
of  War 


THE  BUDGET 

traordinary  organization,  the  budget  plan  for  1891  decided 
to  put  through  a  complete  reform. 

"The  fundamental  feature  of  the  plan  which  we  are 
submitting  is  the  reestablishment  of  the  unity  of  the  budg- 
et. The  only  one  of  the  extraordinary  budgets  still  in 
existence,  and  which,  as  a  matter  of  fact,  is  the  most 
considerable  one,  the  war-budget  again  enters  in  the  ordi- 
nary budget.  It  is  no  longer  possible  to  escape  this  re- 
form.'* (Statement  of  supporting  arguments  by  M.  Rou- 
vier,  Minister  of  Finance,  February  22,  1890.) 

The  Commission  on  Budget  adopted  the  suggestion  of  the 
Minister  of  Finance : 

"Your  Commission  on  Budget  thinks  that  the  incorpo- 
ration of  the  extraordinary  expenditures  of  war  should 
no  longer  be  delayed.  .  .  .  The  extraordinary  budget  of 
war,  designedly  temporary,  has  become  a  perpetual  budg- 
et. ..  .  Your  Commission  has  agreed  with  the  Govern- 
ment to  suggest  the  proper  means  to  put  into  effect  this 
necessary  reform."  (Report  of  Deputy  Burdeau,  July 
3,  1890.) 


The  End  of 
Extraor- 
dinary 
Budgets  in 
France 


The  law  of  December  26,  1890 — determining  the  general 
budget  of  expenditures  and  revenues  for  the  fiscal  period 
1 89 1,  as  a  result  of  the  above  restrictions — carried  no  ex- 
traordinary budget. 

Such  was  the  end  of  the  regime  inaugurated  in  1878.  Since 
then  we  have  had  no  extraordinary  budgets.  The  second 
sections  of  the  budgets  of  the  Ministries  of  War  and  of 
Public  Works,  which  still  exist  under  the  name  of  "Extraordi- 
nary Expenditures,"  are  only  subdivisions  of  the  general 
budget. 

The  only  infraction  of  the  principle  of  budgetary  unity  at 
present  lies  in  the  non-incorporation  of  expenditures  for  rail- 
roads and  a  few  other  kinds  of  works.  It  is  an  open  ques- 
tion whether  the  expenditures  for  works  on  railroads,  car- 
ried out  by  virtue  of  the  agreements  of  1883,  should  be  in- 
corporated.^    As  far  as  other  operations,  classified  outside  of 


1  The  report  of  the  Minister  of  Finance  submitted  to  the  President 
of  the  Republic  on  March  20,  1902,  admits  that  a  rigid  theory  of  the 

252 


.  EXTRAORDINARY  BUDGETS 

the  budget,  are  concerned,  they  are  already  entered  or  are  in- 
tended to  be  entered  regularly,  as  has  been  the  case  since  1901, 
with  the  special  account  on  armaments  opened  in  1898;  thus, 
it  can  be  said  that — aside  from  the  exceptions  which  do  not 
affect  the  principle — ^budgetary  unity  has  been  realized  in 
France  since  the  abolition  of  the  extraordinary  budget. 


Extraordinary  Budgets  Abroad 

The  institution  of  extrax)rdinary  budgets,  as  above  de- 
scribed, does  not  exist  abroad. 

The  Practice  in  England:     First,  in  England,  accounting  Everything 
by  administrative  periods,  which  is  in  force  in  that  country,   ?^*^|jjg^^ 
demands  budgetary  unity.     In  fact,  the  revenues  and  the  ex-   Budget 
penditures  of  the  Exchequer  necessarily  include  in  their  totals 
all  operations  transacted  between  April  i  and  March  31  of 
each  year.     The  finance  accounts,  which  duplicate  the  books 
of   the   Exchequer,    furnish   the   proof    for   our   contention. 
Everything  received  or  expended,  under  any  head,   during 
the  year,  is  entered,  without  possibility  of  being  put  aside,  in 
the  balance  sheet  of  the  accounts  of  the  Treasury. 

This  apparent  unity  of  the  operations  of  the  Treasury, 
however,  does  not  prevent  certain  enterprises  from  being  ex- 
ceptionally supplied  with  funds  by  loans  and  from  forming 
a  special  category,  if  not  in  the  budgetary  tables,  at  least  in 
the  comments  on  these  tables. 

Thus,  the  Chancellor  of  the  Exchequer — submitting  his  Works 
budget  in  April,  1905,  after  having  stated  that  the  expendi- 
tures for  the  year  1904- 1905,  which  were  charged  against 
the  normal  revenues,  amounted  to  3,549,000,000  francs^ — 
did  not  hesitate  to  declare  that  it  was  necessary  to  add  to 
the  total  202,000,000  francs  expended  for  works,  through  the 

budget  would  require  the  incorporation  of  the  expenditures  for  works 
on  railroads,  but  assigned  motives  which  would  justify  a  conclusion 
to  the  contrary. 

^  These  3,549,000,000  francs  of  expenditures  charged  against  the 
normal  revenues  include  only  the  funds  intended  for  the  budget  of 
the  State.  The  Exchequer  collects  245,000,000  more  for  the  benefit 
of  the  local  authorities,  to  which  it  returns  the  amount  subsequently. 
This  made  already  3,794,000,000  francs.  By  adding  to  the  above 
amount  the  202,000,000  of  funds  resulting  from  loans,  the  total  of 
revenues  in  1904-1905  amounted  to  3,996,000,000,  as  the  Chancellor 
of  the  Exchequer  declared  in  his  financial  statement  of  April  10,  1905. 

253 


Funded 
with  Loans 


THE  BUDGET 

authorization  of  loans.    The  same  works,  so  authorized,  would 
expend,  he  said,  220,000,000  the  next  year,  as  estimated. 

Capital  outlays  vary  from  year  to  year.  In  former  times, 
the  works — carried  out  by  virtue  of  the  Imperial  Defense 
Act  of  1888,  the  construction  of  barracks  by  virtue  of  the 
act  of  1890,  naval  armaments  under  act  of  1889 — only  caused 
the  opening  of  accounts  which  were  supplied  with  funds  by 
loans.^  The  opening  of  these  accounts,  particularly  that  un- 
der the  Naval  Defense  Act  of  1889,  met  with  considerable 
objection  when  it  was  submitted  to  the  House  of  Commons; 
an  amendment  offered  by  Mr.  Childers,  former  Chancellor 
of  the  Exchequer,  supported  by  Mr.  Gladstone,^  declared 
"that  the  Chamber  sees  no  reason  for  furnishing  ways  and 
means  other  than  through  the  constitutional  practice,  which 
means  by  entering  annual  appropriations  in  the  budget  of 
expenditures."  This  would  have  been  the  regular  procedure. 
The  Liberal  Party,  coming  into  power  shortly  afterward,  lost 
no  time  in  observing  that: 

*The  51,450,000  francs  which  were  paid  on  the  loan 
should  not  be  forgotten.  These  51,450,000  francs — ' 
added  to  the  normal  expenditures  of  1892- 1893,  amount- 
ing to  2,259,000,000 — increased  the  total  expenditures  of 
the  year  to  2,310,450,000  francs.  A  loan  of  50,000,000 
francs  was  placed  last  year,  and  for  seven  years  loans 
amounting  to  175,000,000  francs  have  been  contracted. 
Let  us  hope  that  these  appeals  for  appropriations  will  soon 
,  come  to  an  end.     This  year,  however,  there  is  still  need 

of  contracting  a  loan  of  37,500,000  francs.*     (Statement 
of  Sir  Vernon  Harcourt  of  April  24,  1893.)^ 

^  The  commission  of  accounts,  however,  recommended  that  four  dis- 
tinct accounts  be  opened  for  the  Nile  expeditions,  the  Soudan,  Bechu- 
analand  and  for  the  defense  of  coaHng  stations  abroad.  {Reports 
from  the  committees  of  public  accounts,  1888.) 

V  -^      2  "^liat  the  opposition  wants,"  said  Mr.  Gladstone,   "is  that  the 

I        needs  of  each  year  shall  be  provided  for  by  the  corresponding  reve- 

i        nues."     (April  3,  1889.) 

/^y  ^  The  naval  defense  act  of  1889  covered  a  period  of  five  years,  dur- 
ing which  70  war  vessels  were  built  in  the  yards  and  more  than  half 
a  billion  francs  were  expended.  At  the  expiration  of  the  building 
period  outlined  by  Hamilton,  First  Lord  of  the  Admiralty  in  1889, 
the  Liberal  Party,  instead  of  continuing  to  finance  themselves  by 
means  of  loans,  as  was  done  by  the  Conservatives,  deemed  it  more 
regular  to  charge  the  efforts  of  the  country,  with  regard  to  naval 
defense,  against  the  annual  appropriations  of  the  Navy.     Thus  the 

254 


EXTRAORDINARY  BUDGETS 


At  the  end  of  1899  and  1900,  a  new  account  was  opened 
to  cover  expenditures  for  the  Transvaal  War,  which  had  been 
temporarily  financed  through  an  issue  of  treasury  bonds. 

Later,  the  total  of  expenditures  from  loans,  according  to 
the  finance  accounts,  reached  the  amount  of  138,875,000 
francs.  In  191 2  there  were  only  111,300,000,  distributed  as 
follows : 

Telegraph  acts,   1892  to  1907 28,750,000  francs 

Telephone  transfer  act,  191 1 75,000,000       " 

Military  works  act,  1897  to  1903 6,250,000       " 

Public  offices'  site,  Dublin,   1903 ..      1,125,000       ** 

Divers 175,000       " 

Total II  1,300,000  francs 

The  existence  of  these  sections  of  the  budget,  supplied  with 
funds  by  means  of  loans,  could  be  but  temporary  in  England. 
In  1912-1913,  as  may  be  remembered,  the  24,750,000  francs 
increase  in  the  naval  program,  caused  by  a  feeling  of  unrest 
in  Europe,  was  authorized  only  by  way  of  a  supplementary 
appropriation  to  the  current  budget.  In  any  case,  these  works, 
even  though  charged  against  funds  resulting  from  a  loan,  did 
not  deserve  to  be  classified  as  extraordinary  budgets,  because 
their  figures  were  merged  in  the  total  of  annual  accounts, 
the  final  addition  of  which  reestablished  the  budgetary  unity.^ 

Practice  in  Germany:  The  budget  of  the  German  Empire 
contains  three  categories  of  expenditures:  ordinary,  tempo- 
rary and  extraordinary. 

Ordinary  expenditures  concern  the  public  debt,  the  essential 
parts  of  the  ministries  of  War,  of  the  Navy,  of  Posts  and 
Telegraphs,  etc.,  the  refunds  to  the  Federal  States,  the  funds 
of  pensioners  and  invalids,  etc. ;  in  a  word,  all  expenditures 
which  have  a  well  defined  character  of  permanence. 

Among  the  temporary  expenditures,  on  the  contrary,  are 
entered  those  not  likely  to  recur,  marking  a  distinct  effort — 

appropriations  for  the  Navy  amounted  tp  1,130,000,000  in  the  budget 
of  1912-1913. 

^  The  recapitulating  tables  distributed  in  the  English  Parliament, 
as  well  as  the  finance  accounts,  carefully  distinguish  the  expenditures 
charged  against  resources  resulting  from  loans,  from  the  expendi- 
tures to  be  charged  against  the  revenue,  although  the  expenditures 
are  united  by  the  same  total. 


Three 
Parts  to 
Budget 


Ordinary 
Expendi- 
tures 

Temporary 
Expendi- 
tures 


THE  BUDGET 

one  which  may  possibly  be  succeeded  by  a  new  effort  of  a 
different  nature;  this  explains  how  the  budgets,  qualified  as 
temporary,  perpetuate  themselves  while  continuing  to  deserve 
their  name.  The  idea  thus  to  classify  temporary  expenditures 
does  not  lack  originality,  because  it  permits  a  reasonable  di- 
viding line  to  be  drawn  between  those  which  can  be  reduced 
and  those  which  cannot;  it  would  be  difficult,  therefore,  to 
criticize  this  procedure  unless  it  should  affect  the  budgetary 
unity.  In  general,  however,  in  Germany,  the  ordinary  and 
the  temporary  expenditures  merge  regularly  into  one  total, 
the  total  of  the  ordinary  budget,  of  which  both  temporary 
and  ordinary  expenditures  form  an  integral  part.  This  is 
shown  in  the  following  table  of  revenues  and  expenditures 
for  1912-1913: 

Permanent  expenditures  of  the  ordi- 
nary budget  2,844,000,000  francs 

Temporary  expenditures  of  the  ordi- 
nary budget  512,000,000       " 

Total    expenditures    of    the    ordinary 

budget  3,356,000,000       " 

Revenues  of  the  ordinary  budget  3,356,000,000       " 


There  is  still  left,  as  a  third  category,  the  "extraordinary 
expenditures,"  which  means  expenditures  met  by  means  of 
extraordinary  resources,  resulting  primarily  from  funds  ob- 
tained through  loans.  These  expenditures  are  made  for  pur- 
poses of  the  Army,  the  Navy,  railroads,  posts  and  telegraphs, 
military  expeditions,  etc.  In  1897,  their  amount  did  not  ex- 
ceed 36,688,000  francs.  In  1895- 1896  they  amounted  to 
59,800,000  francs,  a  sum  much  under  the  173,500,000  of  the 
preceding  year  and  the  231,750,000  francs  of  the  years  1893- 
1894;  one  could  easily  be  led  to  believe  that  the  Empire  was 
bent  on  reducing  its  extraordinary  budgets,  the  dangers  of 
which  were  manifest;  the  institution,  however,  possesses  al- 
ways a  dangerous  degree  of  elasticity;  in  1899,  the  ex- 
traordinary budget  amoimted  to  114,000,000;  for  1905- 1906 
to  370,000,000;  for  1908-1909  it  amounted  to  331,534.000- 
For  1912-1913,  however,  it  reached  but  168,000,000.^ 

^  For  1912-1913  the  Secretary  of  State,  Wermuth,  shows  in  his 
speech  of  ;f*'ebruary  14,  1912,  how  he  intends  to  improve  the  finances 
of  the  Empire  by  transferring  many  expenditures  unduly  entered  in 
the  extraordinary  budget  to  the  ordinary  budget  in  order  to  succeed 
in  curtaihng  loans, 

256 


EXTRAORDINARY  BUDGETS 

The  extraordinary  budgets  of  Germany  are  not  isolated,    The  Ex- 
as  were  the  early  French  extraordinary  budgets.     On  the   Budget"^'^^ 
contrary,  their  figures  are  connected  with  the  figures  of  the 
ordinary  budgets  in  a  final  recapitulation  in  conformity  with 
the  following  example,  which  is  taken  from  the  budget  plan 
for  1912-1913: 

Permanent  and  temporary  expenditures 

of  the  ordinary  budget  3,356,000,000  francs 

Extraordinary  expenditures  168,000,000      " 


General  total  of  the  budgets  3,524,000,000  francs 

The  Practice  in  Prussia:  In  Prussia,  the  extraordinary 
budget  no  longer  depends  on  funds  realized  from  loans,  as 
in  Germany,  where  the  funds  yielded  through  loans  at  times 
overlapped  the  ordinary  budget.  The  surplus  of  revenues 
from  the  ordinary  budget  overlapped  the  extraordinary,  so 
that  the  uniting  of  the  two  budgets  is  done  under  the  most 
favorable  conditions,^  as  in  the  following  summary  taken  from 
the  budget  plan  for  1912-1913: 

Ordinary  expenditures  5,091,500,000  francs 

Extraordinary  expenditures  285,000,000      " 


Grand  total  of  expenditures  5,376,500,000       " 

Total    of    revenues    of    the    ordinary • — 

budget  5,376,500,000  francs 

There  are,  therefore,  no  extraordinary  budgets  in  Prussia. 

The  Practice  in  AustrichHungary :  In  Austria-Hungary, 
the  ordinary  and  extraordinary  budgets  are  combined  in  a 
common  budget,  the  total  of  which  reached  the  amount  of 
about  400,000,000  francs  for  the  last  fiscal  period. 

The  Practice  in  Italy:  Italy  divides  its  operations  into 
four  heads:  actual  operations,  railroad  construction,  transfer 
of  funds  and  routine  operations.  With  regard  to  actual  opera- 
tions, the  ordinary  budget  presents  on  one  side  the  revenues 

1  For  1912-1913  the  extraordinary  budget  had  to  procure  for  itself 
23,750,000  francs  by  way  of  a  loan. 


THE  BUDGET 

and  on  the  other  expenditures,  with  their  figures  of  proceeds 
and  of  appropriations  as  they  are  received  or  paid  out  by  the 
treasuries.  The  division  of  operations  relating  to  railroad 
constructions  separately  classified  all  the  subjects,  which  are 
indicated  by  its  title.  The  shifting  of  capital  fluctuates  more 
or  less,  according  to  whether  the  wealth  of  the  State  is  in- 
creasing or  decreasing.  Finally,  the  routine  operations  are 
described  in  conformity  with  the  rules  of  comprehensiveness. 
The  following  table  gives  an  example  of  the  construction  of 
the  last  Italian  budget : 

Actual  expenditures  2,181,952,000  lire 

which  are  covered  by  1,798,965,000  lire 
of  actual  revenues,  thus  leaving  a  sur- 
plus of  80,112,000  lire. 
Shifting  of  capitals,  expenditures  218,685,000    " 

Expenditures  for  railroad  constructions  43,900,000    " 


Grand  total  of  expenditures  2,444,537,000  lire 

As  far  as  the  grand  total  of  expenditures  is  concerned,  it 
is  offset  by  a  grand  total  of  revenues  amounting  to  2,499,- 
497,000  lire,  which,  as  we  have  seen,  are  obtained  almost  en- 
tirely through  the  revenues  of  the  ordinary  budget;  thus,  a 
final  surplus  of  54,958,000  lire  remains.  Moreover,  the  trans- 
fer of  funds  for  order  amounts  to  58,434,000  lire  in  the 
revenues  and  expenditures. 

Thus,  the  Italian  budget  resolved  itself  into  a  single  total 
of  revenues  and  of  expenditures  which,  it  may  be  said,  inci- 
dentally, has  regularly  shown,  during  the  last  few  years,  a 
handsome  surplus.  The  divisions,  therefore,  which  have  been 
adopted  by  the  Italian  system  of  accounting  and  which  have 
their  own  surpluses  or  their  own  deficits  *  do  not  interfere 
with  the  establishing  of  a  budgetary  unity. 

The  Practice  in  Russia:  Russia,  it  is  true,  has  an  ex- 
traordinary budget,  intended  primarily  to  care  for  the  ex- 
penditures involved  in  the  construction  of  railroads.     But,  as 

^  Among  these  divisions,  the  division  of  railroad  construction, 
M^hich  was  formerly  provided  with  funds  from  loans,  was  offset  by  the 
surplus  of  resources.  It  now  shows  a  deficit,  but  this  deficit  is  cov- 
ered by  actual  revenues,  which  is  to  be  preferred  to  the  technical  sur- 
plus of  former  times  which  resulted  from  funds  obtained  by  loans. 

258 


EXTRAORDINARY  BUDGETS 

the  funds  of  the  extraordinary  budget  are  usually  only  sur- 
pluses from  the  ordinary  budgets,  and,  as  a  final  total  com- 
bines the  two  budgets  in  such  a  way  as  to  strike  a  balance,  we 
can,  even  here,  speak  of  a  budgetary  unity,  except  in  times 
of  war.  During  the  Russo-Turkish  war  of  1878,  as  well  as 
during  the  Russo-Japanese  war  of  1904- 1905,  a  special  ac- 
count outside  of  the  budget,  which  was  a  real  extraordinary 
budget,  classified  separately  the  abnormal  operations. 

The  Practice  in  Belgium:  One  must  go  to  Belgium  to  find 
a  normal  and  complete  type  of  the  extraordinary  budget. 
There,  too,  we  are  accustomed  to  find  other  good  examples. 
In  Belgium,  even  for  a  long  time,  the  extraordinary  budget 
has  been  greatly  abused. 

Thus,  as  a  speaker  from  the  opposition  party  said :     "300,-   Adverse 
000  francs  were  entered  in  the  extraordinary  budget  for  the   o^'pj'acdce 
exposition  in  Chicago,  an  exposition  temporary  in  character;   There 
1,000,000  was  appropriated  for  distribution  of  seed-potatoes 
among  farmers   who  suffered  damages  through   frost.  ... 
These  potatoes  were  eaten  long  ago  and  future  generations 
will  not  have  even  an  after-taste  of  them."     The  cost  of  the 
banquet  which  was  given  to  the  Shah  of  Persia  was  entered 
in  an  extraordinary  budget:     "Whom  shall  this  expenditure 
benefit?     The  future  generations  of  Belgium  or  the  future 
generations  of  the  Shah?" 

'The  extraordinary  budget,"  this  speaker  added,  "is  the 
juggler's  cup,  by  means  of  which  the  Minister  of  Finance 
disposes  of  the  deficit." 

The  budget  for  1895  contained  a  section  headed:  Excep- 
tional Expenditures,  which  set  out  several  ordinary  operations 
until  then  concealed  in  the  extraordinary  budget,  which  hence- 
forth is  supposed  to  contain  only  "expenditures  for  works 
which  relate  to  the  extension  or  improvement  of  public  utili- 
ties." 

In  spite  of  the  good  intentions  of  this  reform,  it  still  re; 
mains  rather  vague.  Under  the  pretext  of  being  temporary, 
the  expenditures  for  military  improvements  and  certain  other 
expenditures  outside  of  the  program  are  still  entered  in  the 
extraordinary  budget.  A  table  for  ten  years  shows  that  from 
1900  until  191  o  alx)ut  80,000,000  francs  of  expenditures,  other 
than  public  utilities,  were  so  charged. 

The  extraordinary  budgets  of  Belgium  amounted  to  123,- 
000,000   francs   in   1905,  to    155,500,000  in   1907,  to   126,- 

259 


THE  BUDGET 

000,000  in  191 1.  These  sums  were  used  for  railways,  posts 
and  telegraphs,  roads,  canals,  rivers  and  harbors,  neighbor- 
hood roads,  military  buildings,  army,  etc.  As  we  see,  almost 
all  branches  of  the  service  avail  themselves  of  the  extraordi- 
nary budget.  Submitted  and  voted  separately,  with  no  con- 
nection with  the  ordinary  budget,  but  so  drawn  as  to  be  car- 
ried forward  from  one  fiscal  period  to  the  next,^  the  Belgian 
extraordinary  budget  has  all  the  objectionable  features  of  the 
institution,^  and  it  would  be  dangerous  in  a  country  less  wisely 
administered  than  Belgium.^ 

The  Practice  in  Japan:  Japan  could  not  very  well  be  re- 
proached for  failing  to  keep  within  the  scope  of  the  ordinary 
budget  the  expenditures  of  its  stupendous  and  rapid  expan- 
sion. Since  its  war  with  China,  in  1881,  Japan  has  had  an 
extraordinary  budget,  which  is,  increasing  from  year  to  year. 
There  are  many  indications,  however,  that  she  does  not  ig- 
nore the  merits  of  budgetary  unity.  In  the  meantime,  in  order 
to  avoid  the  excesses  which  its  system  involves,  Japan  never 
provides  the  ordinary  budget  with  funds  through  loans. 
Quite  to  the  contrary,  the  surpluses  of  fiscal  revenues  invari- 
ably form  the  first  item  of  extraordinary  resources,  amount- 
ing at  times  to  200,000,000  francs  or  more;  nowadays  this 
surplus  is  much  less.  Special  accounts  segregated  the  ex- 
penditures of  the  war  with  Russia.^  For  1911-1912,  the 
budgets  show  the  following  figures: 

Ordinary  expenditures,  1,058,000,000  francs 

Extraordinary  expenditures,  409,000,000      " 

Grand  total,  1,467,000,000  francs 

^  In  France  the  power  of  carrying  forward,  which  was  first  admit- 
ted by  the  law  of  1878,  was  taken  away  from  the  extraordinary 
budgets  in  1882  because  of  resulting  abuses,  obscurities  and  difficulties 
of  control. 

In  Belgium,  on  the  contrary,  this  power  of  carrying  back  still  ex- 
ists, resulting  for  1905  in  an  amount  of  111,916,000  francs  carried 
forward  as  the  balance  of  1903  and  1904;  in  1907  167,000,000  francs 
carried  forward,  the  balance  of  1905  and  1906,  etc. 

2  See  on  this  subject  the  above  mentioned  work  of  M.  Ernest 
Dubois  under  the  title.  Etude  sur  le  systeme  beige  en  maticre  de 
budget  de  VEtat,  1904. 

^  Thus  Belgium  appropriates  for  the  expenditures  of  her  extraordi- 
nary budget  the  surpluses  of  her  ordinary  budget,  amounting  fre- 
quently to  quite  considerable  sums. 

*  The  debit  side  of  the  account  relating  to  the  war  with  Russia  now 
exceeds  5,000,000,000  francs. 

260 


EXTRAORDINARY  BUDGETS 

Recapitulating,  the  extraordinary  budgets  are  everywhere 
regarded  with  suspicion,  even  in  Belgium  and  Japan,  where 
they  are  still  in  force.  They  have  been  abolished  in  a  more 
or  less  categorical  way  in  most  countries.  They  have  been  uni- 
versally condemned,  either  by  the  apologists  or  by  the  conduct 
of  those  who  prepare  the  budgets. 

Budget  of  Special  Resources   [Agency  Accounts,  De- 
ductions FROM  Revenues,  Etc.] 

The  budget  of  special  resources  was  established  July  2,    Origin  of 
1862,  coincident  with  the  extraordinary  budget.     As  far  as   J^'^^pJlJ^j^ce 
the  extraordinary  budget  is  concerned,  it  was  a  revival,  as 
we  may  recall,   of   the  attempts  of  1833   and    1837.     The 
budget  of  special  resources,  on  the  contrary,  was  originated  by 
the  law  of  July  2,  1862. 

*Tts  establishment,"  said  the  statement  of  supporting 
arguments,  "has  in  view  the  segregation  from  the  ordi- 
nary budget  of  the  expenditures,  which,  being  covered  by 
means  of  assessments  voted  by  local  councils,  are  not  en- 
tered in  the  general  budget  except  to  comply  with  the  rules 
of  our  accounting  system.  Entered  at  the  same  time  on 
the  debit  and  on  the  credit  sides,  they  cannot  be  considered 
as  the  expenditures  of  the  State." 

Why  should  the  budget  of  the  State  include  ^  in  itself  local    Not  a  Part 
revenues  and  expenditures  ?    Because,  it  was  said,  the  officials   pjnances 
of  the  Treasury  collect  them  and  the  rules  of  accounting  re- 
quire that  the  budget  of  the  State  should  describe  all  the  op-  . 
erations  of  its  agents.     This  is  an  erroneous  principle,  which 
the  reform  of  the  law  of  July  2,  1862,  confirmed  by  expressly 
establishing  a  new  budget  for  the  purpose  of  separately  classi- 
fying these  local  operations  as  operations  of  the  State.    ,The 
proper  thing  would  have  been  to  leave  them  outside  of  the 
budget. 

^  Before  1862  the  expenses  of  the  departements  were  included  in  the 
budget  of  the  Ministry  of  the  Interior,  the  centimes  additionnels 
communaux  were  included  in  the  section  of  the  Ministry  of  Finance, 
which  section  had  the  following  heading:  reimbursements  and  resti- 
tutions; the  non-valeurs  were  distributed  among  the  ministries  of 
Finance,  of  Agriculture  and  of  the  Interior. 

It  is  therefore  necessary  to  segregate  the  State  budgets  until  1862 
from  the  amount  of  these  local  revenues  and  expenditures  in  order 
to  obtain  data  which  may  be  compared  with  present  statistics. 

261 


THE  BUDGET 

The  statement  of  supporting  arguments  on  the  law  of 
July  2,  1862,  explained  that  the  settlements  in  question  *Svill 
be  regulated  by  section  II  of  the  fiscal  law,  while  section  I 
will  apply  only  to  those  expenditures  and  revenues  which  de- 
serve to  be  considered  a  part  of  the  ordinary  budget  of  the 
State."  The  statement  of  supporting  arguments  admitted  that 
section  II  was  unnecessary. 

Character  of  Items  Included:  Three  main  categories  of 
revenues  and  expenditures  were  included  in  the  budget  of 
special  revenues,  as  follows: 

1.  Revenues  and  expenditures  of  departements  in  toto. 

2.  The  proceeds  and  deposits  of  centimes  communaux  col- 
lected on  account  of  municipal  budgets. 

3.  The  proceeds  and  the  use  of  the  funds  of  non-valeurs 
and  of  reassessment. 

The  relative  importance  of  each  of  these  is  indicated  by  the 
following  figures  taken  from  the  budget  for  1892 : 

Budgets  of  the  departements  239,449,000  fr. 

Proceeds  and  centimes  communaux  180,093,990    " 

Funds  of   non-valeurs,   reassessments,   costs 

of  tax-collection  notices,  subsidies,  etc.        26,254,776    " 
Sundry  8,553,660    " 


Total  454,351,426  fr. 

Definition  In  conformity  with  this  explanation,  the  budget  of  special 

resources  may  be  defined  as  follows :  "The  budget  of  special 
resources  classifies  separately  the  revenues  and  the  expendi- 
tures which  run  through  the  budget  of  the  State  without  form- 
ing a  part  of  it." 

Examination  of  the  several  elements  of  the  budget  of  spe- 
cial-  resources,  as  enumerated  above,  will  show  still  more 
clearly  that  the  reason  supposedly  deduced  from  the  rules  of 
accounting  and  used  as  a  supporting  argument  for  the  law  of 
1862  has  in  reality  no  validity  whatever.  The  statement  of 
supporting  arguments  for  the  budget  of  1884  repeated  that 
"its  operations  should  not  be  withdrawn  from  the  vote  of  the 
legislature."  (Statement  of  supporting  arguments  drafted  by 
M.  Tirard,  March  3,  1883.)  ^     Without  incurring  the  risk  of 

^  In  1883,  5,426,000  francs  of  revenues  and  expenditures  were  in- 
cluded in  the  ordinary  budget  because  they  did  not  possess  the  charac- 

262 


EXTRAORDINARY  BUDGETS 

being  classed  as  an  ignoramus,  one  may  admit  failure  to  un- 
derstand why  the  legislature's  obligation  to  vote  should  arise 
in  this  connection.  The  dcpartements,  as  well  as  the  munici- 
palities, are  corporate  entities,  which,  through  their  elective 
councils,  vote,  control  and  regulate  their  own  budgets.  Speak- 
ing, therefore,  from  the  budgetary  point  of  view,  the  State 
has  nothing  to  do  with  them. 

Collections  for  Municipalities:     First,  as  far  as  the  centimes   Communes 
connmmaux  are  concerned,  the  same  agents  collect  them,  as   xheir° 
well  as  the  direct  taxes  for  the  State  and  for  the  municipali-   Finances 
ties.     The  connection,  however,  is  clearly  administrative.   The 
State  does  not  enter  the  proceeds  of  these  centimes  com- 
nmnaux  in  its  estimates;  it  may  not  consider  them  in  estab- 
lishing the  balance  of  its  own  budget.     In  short,  the  legisla- 
ture has  no  control  over  these  sums,  which  other  agencies 
dispose  of  with  almost  sovereign  authority. 


Collections  for  Departements :  As  far  as  the  departements 
arc  concerned,  the  budget  of  special  resources  not  only  con- 
solidated the  centimes  additionnels  with  the  direct  taxes  but 
also  the  revenues  and  expenditures.  Thus,  the  encroachment 
became  manifest.  Doubtless  the  budgets  of  the  departements 
were  for  a  long  time  incorporated  in  the  budget  of  the  State ; 
particularly  under  the  First  Empire,  they  formed  a  subdivi- 
sion of  the  State  budget.  But,  at  that  time,  they  were  not 
complete  political  units.  The  conseillers  generaux  were  ap- 
pointed by  the  Emperor,  or  the  head  of  the  State ;  ^  but,  since 
the  constitutional  law  of  May  lo,  1838,  established  the  au- 
tonomy of  the  departements,  they  possess  a  corporate  entity: 
They  can  acquire  and  hold  an  estate,  increase  it  by  acceptance 
of  gifts  and  bequests  and  control  the  budgets  of  revenues  and 
expenditures.^  These  powers — confirmed  by  the  laws  of  July 
18,  1866,  and  of  August  10,  1871 — became  absolutely  incon- 
sistent with  the  budgetary  tutelage  which  the  State  continued 

teristic  features,  properly  speaking,  of  the  budget  of  special  resources 
in  which  they  were  until  then  included.  (Statement  of  supporting 
arguments  of  the  budget  for  1884,  March  3,  1883.) 

1  Beginning  with  the  law  of  July  18,  1833,  the  conseillers  ge- 
neraux became  elective  agents. 

2  On  the  subject  of  the  history  of  the  budgets  of  the  departements 
of  their  autonomy,  and  of  the  results  of  the  law  of  July  18,  1892,  see 
the  speech  of  Advocate  General  Chantereau  at  the  opening  session 
of  the  Cour  des  Comptes  on  October  16,  1895, 

263 


Local  Au- 
tonomy of 
Departe- 
ments 


THE  BUDGET 

to  exercise.^     As  far  as  the  funds  of  non-valeurs  are  con- 
cerned,   nothing    prevented    their    being    distributed    among 
the  various  chapters  of  the  State  budget,  as  was  done  after 
1892. 
The  Fiscal  Therefore,  the  law  of  July  18,  1892 — 30  years  after  the  law 

^g^^  °^  of  1862— declared:     "Article  18.  The  Budget  on  special  re- 

sources is,  and  should  be  abolished,  beginning  with  the  fiscal 
period  1893." 

The  statement  of  supporting  arguments  set  out : 

"We  are  abolishing  the  budget  of  special  resources. 
As  a  result  thereof,  the  departements  will  henceforth  ad- . 
minister  directly  their  own  finances,  as  do  the  municipal- 
ities. The  ministers  shall  no  longer  intervene  in  the  exe- 
cuting of  orders  for  payment  of  expenditures ;  the  prefect 
shall  have  the  initiative,  his  duties  being  analogous  to 

1  In  1888  coincident  with  the  plan  to  change  the  opening  date  of 
the  fiscal  year,  a  plan  for  the  abolition  of  the  budget  on  special  re- 
sources was  presented,  but  was  rejected.  The  statement  of  support- 
ing arguments  said:  "The  budget  on  special  resources,  properly 
speaking,  is  but  an  accounting  of  certain  resources  rather  than  a  real 
budget  making  appropriations  for  the  purpose  of  limiting  the  expendi- 
tures, and  creating  resources  for  meeting  them.  ...  By  abolishing 
this  budget  we  would  once  more  sacrifice  the  corporate  entity  of  the 
departements  which  was  recognized  by  the  laws  of  May  10,  1838,  and 
of  August  10,  1871.  Henceforth  the  budgets  of  the  departements 
shall  be  assimilated  in  the  budgets  of  municipalities,  the  prefect 
shall  become  the  principal  agent  passing  orders  for  payment  of  ex- 
penditures, while  at  present  he  is  only  a  secondary  agent  acting  by 
order  of  the  Ministers  of  the  Interior,  of  Public  Instruction  and  of 
Finance.  .  .  . 
I  The  legislature,  however,  shall  continue  to  determine  every  year 

in  the  law  on  direct  taxes  the  maxima  within  the  limits  of  which 
the  conseils  generaux  can  move  with  regard  to  the  vote  on  the 
centimes  additionnels.  .  .  ."  (Bill  relating  to  the  changing  of  the  open- 
ing date  of  the  fiscal  year,  April  24,  1888.) 

The  Commission  on  Finances  of  the  Senate,  opposed  to  the  plan 
of  changing  the  opening  date  of  the  fiscal  year,  did  not  consent  to 
the  separation  of  the  part  of  the  plan  which  related  to  the  abolition 
of  the  budget  on  special  resources,  as  was  proposed  by  one  of  its 
members:  "All  the  articles  of  the  bill,"  the  Commission  says,  "are 
.the  consequences  of  a  new  principle  which  the  Commission  condemns. 
They  should  be  rejected  together  with  the  changing  of  the  opening 
date  of  the  fiscal  year,  which  is  the  real  subject  of  the  discussion." 
(Report  of  the  Commission  on  Finances  of  the  Senate,  by  M.  Leon 
Say,  June  11,  1888.)  M.  Leon  Say,  however,  as  is  shown  by  a  later 
quotation,  was  one  of  the  supporters  of  the  abolition  of  the  budget 
on  special  resources. 


EXTRAORDINARY  BUDGETS 

those  of  the  mayor  of  a  community.  The  Treasurer-Gen- 
eral shall  be  continued,  as  an  accountable  officer,  but  he 
shall  become  the  accountant  of  the  departement,  and 
his  position  shall  be  that  of  a  municipal  receiver.  ..." 

(Budget    plan     for    the    fiscal    period     1893,    March 

10,  1892.)  ^ 

The  budgets  of  the  departements,  as  we  have  seen,  consti- 
tuted more  than  half  of  the  budget  on  special  resources; 
their  elimination  represented,  therefore,  the  main  fea- 
ture of  the  reform  of  1892.  The  centimes  communaux, 
which  represented  a  much  smaller  item,  disappeared 
more  easily,  as  no  principle  was  involved  with  regard  to 
them : 

"The  budget  of  special  resources  at  least  had  the  merit 
of  stating  the  use  en  bloc  of  all  the  resources  of  the  dS- 
partements;  it  does  not  have  the  same  merit  with  respect 
to  municipalities.  In  fact,  it  limits  itself  to  showing  the 
importance  of  the  centimes  additionnels  communaux, 
which  constitute  only  a  portion  of  the  municipal  rev- 
enues. In  other  words,  the  centimes  communaux  appear 
in  the  budget,  only  to  be  eliminated  the  moment  they  are 
returned  to  the  municipal  collectors.  These  are  purely 
treasury  operations,  which  have  no  place  in  the  budget 
of  the  State." 

Reductions  from  Revenues ,  Etc.:  Once  these  two  im- 
portant sections  had  been  eliminated,  there  remained  the  funds 
of  non-valeurSj  most  difficult  to  classify,  because  of  their  pe- 
culiar character.  The  centimes  additionnels — which  supply 
them  with  funds,  levied  exclusively  for  covering  up  reductions 
in  taxes  and  false  and  double  use  of  the  rolls  and  losses  re- 
sulting from  extraordinary  events  (conflagrations,  hail- 
storms, inundations,  phylloxera,  etc.) — assume  the  appear- 
ance of  a  sort  of  insurance  fund  upon  which  the  State  does 

^  Why  would  not  the  prefects  and  the  conseils  generaux  have  the 
same  power  with  regard  to  the  accounting  of  their  own  budgets 
as  have  the  mayors  and  the  Municipal  Councils  with  regard  to  the 
municipal  budgets?"  There  is  no  reason  for  it  and  it  cannot  be 
understood.  It  is  an  exaggeration  of  the  system  of  centralization 
which  has  no  reason  for  existence.  ...  I  would  like  to  abolish  the 
budget  on  special  resources,  which  is  a  defective  procedure  of  ac- 
counting. .  .  ."  (Speech  of  M.  Leon  Say,  Chamber  of  Deputies, 
July  10,  1890.) 

265 


THE  BUDGET 

not  seem  authorized  to  encroach  ^  because  this  fund  represents 
the  property  of  the  taxpayers.^ 

An  objection,  however,  has  been  raised,  that  this  insurance 
fund,  although  contributed  by  the  taxpayers,  is  exclusively 
established  for  the  benefit  of  the  State  as  a  guarantee  against 
the  possibility  of  inadequate  collections.  Owing  to  the  funds 
of  non-valeurs  the  Treasury  collects  the  total  of  the  assessed 
taxes  as  shown  by  the  assessment  rolls.  There  is  in  reality, 
therefore,  only  one  budgetary  revenue  the  place  of  which  is 
in  the  general  budget  itself.  This  is  what  the  law  of  July  i8, 
1892,  most  wisely  introduced. 

All  the  elements  of  the  budget  on  special  resources  have 
thus  been  scattered,  either  by  elimination  or  by  absorption; 
"this  artificial  combination  of  incoherent  elements"  ^  disap- 
peared definitely  from  the  fiscal  law,  beginning  with  January 
I,  1893,  and  is  today  but  a  reminiscence. 

^  The  funds  of  non-valeurs,  with  regard  to  contributions  "of  reparti- 
tion," formed  to  such  an  extent  a  special  fund  that  its  surpluses, 
available  at  the  end  of  a  fiscal  period,  were  carried  forward  from 
year  to  year.  This  amount  showed  at  the  end  of  the  fiscal  period, 
1890,  a  balance  of  1,223,260  francs.  The  plan  for  the  abolition  of 
the  budget  on  special  resources  submitted  in  1888  first  suggested  the 
establishment  for  the  benefit  of  the  fund  of  non-valeurs  a  special 
branch  of  the  Treasury  which  would  be  outside  of  the  budget. 
(Statement  of  supporting  arguments  of  April  24,  1888.) 

2  Although  the  fund  of  non-valeurs  cannot  be  touched,  it  was  still 
used;  its  hoard  has  tempted  all  the  budgets.  Two  successive  charges 
against  this  fund  were  made  for  the  benefit  of  the  expenditures 
of  the  war  with  Mexico,  the  first  charge  amounted  to  6,000,000  (law 
of  May  13,  1863),  the  second  to  7,000,000  (law  of  July  18,  1866), 
a  total  of  13,000,000,  which  reduced  the  reserve  in  this  fund.  Be- 
sides, since  1884,  the  costs  of  printing  and  of  making  out  the  assess- 
ment rolls  and  summons  to  pay  direct  taxes,  which  costs,  amounting 
to  almost  1,266,000  francs  per  year,  and  which  the  State  had  de- 
frayed, were  charged  against  this  fund. 

^  Report  of  the  Commission  of  the  Chamber  of  Deputies,  by  M. 
Camille  Pelletan,  May  28,  1888. 


266 


CHAPTER  XI 

THE  TREASURY— ITS  SPECIAL  FEATURES  AS  RE- 
LATED TO  BUDGETS 

Special  Features  of  the  Treasury:  Relation  of  the  Treasury  to  the 
Budgets :  The  Treasury  as  Banker ;  Decouverts  and  Advances ;  The 
Budgets  as  Debtors  to  the  Treasury;  The  Amount  Balanced  by 
Floating  Debt;  Reestablishing  the  Equilibrium;  Sources  of  Treas- 
ury Funds. 

Two  Divisions  of  the  Floating  Debt:  The  First  Class;  Bonds  as  an 
Element;  The  Cash  Bonds;  Special  Accounts;  The  Way  to  the 
Treasury;  Vicious  Treasury  Operations;  Loans  to  Industries;  The 
Greek  Loan;  The  Defenses  of  Calais;  Dangerous  Law  of  Febru- 
ary, 1898;  Advances  to  Schools,  etc. 

Guarantees  of  Interest  to  Railroad  Companies:  The  Terms  of  the 
Guarantee;  Objectionable  Features;  Two  New  Accounts;  Repeal 
of  the  Law  on  Guarantee;  Excuse  for  Special  Activities;  Special 
Activities  Pernicious. 

There  are  special  activities  of  the  Treasury,  for  which  there 
is  no  official  text,  that  have  been  described  as  follows:  "The 
special  activities  of  the  Treasury  have  to  do  with  getting  the 
cash,  which  they  temporarily  needed,  directly  from  the  Treas- 
ury, outside  of  the  budgets,  until  the  receipts  balance  the 
disbursements." 

This  could  not  be  very  well  understood,  unless  the  words 
"budget"  and  "treasury"  were  understood  beforehand. 


Special  Features  of  the  Treasury 

The  term  "budget"  is  already  understood.  We  know  that 
it  represents  the  total  revenues  and  expenditures  of  a  year. 
But  the  "Treasury"  has  not  been  described ;  it  may  be  defined 
as  follows :  The  Treasury  is  the  great  reservoir  for  the  re- 
sources of  the  State.  Into  this  reservoir  flow  all  the  revenues, 
regardless  of  their  character;  definite  revenues,  revenues  to 
order  [potir  ordre']  and  Treasury  revenues;  and  from  this 
reservoir  issue  all  actual  payments,  payments  to  order  and 

26y 


THE  BUDGET 

Treasury  payments.     The  level  of  funds  rises  with  receipts 
and  falls  with  payments,  like  water  in  a  reservoir. 

The  metaphors  do  not  hold  very  long,  and  the  last  one  fails 
when  it  becomes  necessary  to  explain  why  the  reservoir  is 
not  one  truly.  The  cash  and  the  negotiable  papers  of  the 
Treasury  are  in  the  hands  of  accountable  officers  all  over 
the  country.  The  unity  of  the  Treasury  exists  only  on  paper 
in  accounts  which  show  the  movement  of  funds.  This  unity 
is  complete  only  on  paper.  The  Minister  of  Finance  at  will 
and  on  the  shortest  notice  can  centralize  or  scatter  the  funds 
and  the  valuable  papers  which  are  distributed  among  the  thou- 
sands of  agencies  under  his  jurisdiction.^  From  this  point 
of  view,  the  Treasury  is  an  entity,  not  well  defined  by  the 
metaphor  of  a  reservoir,  at  least  so  far  as  its  material  con- 
ception is  concerned. 

Relation  of  the  Treasury  to  the  Budgets:  The  budget  and 
the  Treasury  possess  each  a  distinct  personality.  They  are 
constantly  in  touch  with  one  another,  although  they  move 
within  independent  spheres  and  have  their  own  characters. 

Let  us  first  examine  their  differences  of  character  and  then 
study  their  relations. 

The  existence  of  budgets  is  essentially  limited  to  the  period 
for  which  they  are  designed,  and,  as  soon  as  this  period  is 
ended,  they  disappear.  One  budget  ends  and  is  succeeded  by 
another.  The  Treasury,  on  the  contrary,  has  no  end;  it  con- 
tinues its  operations  without  interruption.*'^  It  would  be  pos- 
sible to  connect  the  present  Treasury  with  that  of  the  first 
Capets,  if  the  records  of  the  Treasury  had  been  preserved; 
in  the  same  way  it  can  be  connected  in  the  future  with  the 
Treasury  of  the  Republics  to  come. 

What  relations  can  exist  between  the  budgets,  which  come 

^  The  number  of  public  treasuries,  including  those  of  the  colonies, 
reaches  13,000  or  14,000,  of  which  we  give  the  following  list: 
General  treasurers,  87 

Fiscal  receivers,  .  273 

Receivers  of  registration  dues,     2,822 
*  Receivers  of  customs  dues,  522 

Receivers  of  indirect  taxes,  2,685 

Receivers  of  tax  collectors,  5,000 

2  The  accounts  of  the  Treasury  are  closed,  but  not  its  operations. 
At  certain  times  the  level  of  the  funds  in  the  great  reservoir  is  ascer- 
tained, which  reservoir  does  continue,  however,  to  be  filled  or  to  be 
emptied. 

268 


THE  TREASURY— SPECIAL  FEATURES 

and  go,  and  the  Treasury,  which  exists  permanently?  It  is  The 
often  said  that  the  Treasury  is  the  banker  of  the  budgets.  Treasury 
It  is  a  new  comparison,  which,  for  the  time  being,  seems  to 
be  exact.  The  budgets,  even  the  regular  ones,  could  not 
possibly  do  without  the  services  of  the  banker.  If,  for  ex- 
ample, during  the  first  months  of  the  year,  when  the  revenues 
have  not  come  in,  the  budgets  could  not  draw  on  Treasuiy 
reserve  funds,  the  best  of  them  would  have  to  postpone  its 
payments.  As  far  as  budgets  closed  with  a  deficit  ar^  con- 
cerned, after  having  expended  more  than  they  have  taken  in, 
they  would  terminate  in  a  real  bankruptcy  if  the  Treasury  did 
not  come  to  the  rescue. 

The  Treasury  performs,  with  regard  to  budgets,  the  same 
function  which  the  banker  holds  to  his  clients.  On  the  one 
hand,  it  receives  all  their  available  funds  and  pays  their 
current  expenditures.  On  the  other,  it  advances  them  money 
in  case  of  need ;  these  cases  of  need  occur  either  when  opera- 
tions require  a  temporary  advance,  or  when  there  is  a  final 
deficit  requiring  cash  to  cover  it. 

This  last  case  has  unfortunately  occurred  quite  often  in  Dhouverts 
the  budgets,  and  there  is,  therefore,  in  the  Treasury  the  very  ^j^^nggg 
important  account  of  decouverts,  which  may  be  defined  as 
follows:  the  decouverts  represent  the  indebtedness  to  the 
Treasury  of  all  the  budgets  which  closed  with  a  deficit.  But, 
as  the  account  in  question  has  the  following  complete  title: 
Decouverts  and  advances  of  the  Treasury,  it  is  necessary, 
in  order  to  be  exact,  to  divide  the  definition  into  two  parts. 
We  have,  on  the  one  hand,  the  decouverts,  properly  speaking 
— which  means  "reserves  made  in  the  Treasury  for  the  pur- 
pose of  covering  the  deficits  of  expired  budgets" — these  form 
the  larger  portion  of  the  account  of  4,300,200,000  francs, 
according  to  the  latest  statistics.  On  the  other  hand,  we  have 
the  advances — "reserves  made  in  the  Treasury  at  certain 
times  in  order  to  make  payments,  which  are  reimbursed  by 
the  budgets" — they  amount  to  1,226,000,000  francs.  In  1830, 
for  example,  de  Montbel,  Minister  of  Finance,  took  directly 
from  the  Treasury  371,051  francs  and  distributed  them  among 
the  troops  which  defended  the  throne  of  Charles  X ;  this  was 
an  advance  which  has  never  been  reimbursed.  In  1870,  dur- 
ing the  war  with  Prussia,  a  sum  of  16,689,837.50  francs  was 
taken  in  the  same  way  from  the  public  Treasury  in  order  to 
continue  the  functions  of  the  Commission  on  Armaments. 
Various  supplements  of  appropriations,  not  ratified  by  the 

269 


THE  BUDGET 


The  Budg- 
ets as 
Debtors 
to  the 
Treasury 


The 
Amount 
Balanced 
by  Float- 
ing Debt 


ChamberSj  have  been  balanced  by  the  Treasury,  always  under 
the  pretext  of  advances  which  were  not  reimbursed. 

In  total,  5,526,000,000  francs  of  decoiiverts  and  of  ad- 
yances  have  thus  been  accumulated  to  the  detriment  of  the 
Treasury;  this  is  a  gross  figure  from  which  various  credits 
and  surpluses,  successively  accrued,  must  be  deducted.  First 
of  all,  certain  budgets  left  surplus  revenues  to  the  amount  of 
1,446,000,000  francs;  then  loans,  under  various  forms,  fur- 
nished, 2,850,000,000.  This  leaves  a  net  balance  of  1,230,- 
000,000  francs  of  which  the  Treasury  has  been  definitely  de- 
spoiled, according  to  the  last  statement.^ 

It  is,  therefore,  necessary  to  restitute  to  the  Treasury  the 
funds  which  have  been  taken  from  it.  The  comparison  to  the 
reservoir  becomes  particularly  suggestive.  Nothing  could  be 
got  out  of  an  empty  reservoir.  A  reservoir  from  which  is 
taken  more  than  it  contains  is  inconceivable.  The  1,299,000,- 
000  francs  which  have  disappeared  must  be  restored  by  new 
funds;  these  funds  are  supplied  by  the  floating  debt.  . 


Reestab- 
lishing  the 
Equilib- 
rium 


Sources    of 

Treasury 

Funds 


Floating  Debt  as  a  Treasury  Resource:  Speaking  in  a 
general  way,  the  mission  of  the  floating  debt  is  to  provide 
the  Treasury  with  capital  in  the  form  of:  (i)  cash  on. hand; 
(2)  funds  to  reestablish  the  debit  balance  of  the  decoiiverts 
and  of  the  advances;  (3)  to  restore  the  equilibrium  of  special 
activities  of  which  we  shall  presently  speak,  in  case  these  spe- 
cial activities  show  a  debit  balance. 

In  consequence,  the  floating  debt  can  be  defined  as  follows : 
the  floating  debt  constitutes  one  of  the  resources  of  the  Treas- 
ury. It  includes  the  funds  turned  in  on  a  drawing  account 
or  deposited,  and  the  funds  resulting  from  sales  of  Treasury 
Bonds. 

This  definition  contains  two  ideas.  One  tends  to  specify 
the  nature  of  the  floating  debt;  the  other  to  show  that  it  is 
"one  of  the  resources  of  the  Treasury"  and  nothing  more, 
in  spite  of  certain  formulae  which  must  be  distrusted.  The 
Treasury,  in  fact,  acquires  its  resources  either  from  the  tem- 
porary surpluses  or  revenues  of  the  current  budgets,  or  from 
the  credit  balances  of  special  activities,  or  from  the  proceeds 
of  consolidated  loans  or  various  extraordinary  means.  The 
funds  put  at  the  disposal  of  the  Treasury  by  the  floating  debt 


^  These  figures  are  taken  from  the  annexed  schedules  of  the  state- 
ment of  supporting  arguments  of  the  budget  for  1913. 

270 


Class 


THE  TREASURY— SPECIAL  FEATURES 

occupy  the   fourth  place,   although  they  may  be  considered 
the  most  customary  resource,  if  not  the  most  important. 

Two  Divisions  of  the  Floating  Debt:  As  far  as  the  com- 
position of  the  floating  debt  is  concerned,  with  which  the  sec-  The  First 
ond  idea  contained  in  its  definition  deals,  the  floating  debt  is 
divided  into  two  principal  parts,  the  first  of  which  includes 
funds  turned  over  to  the  Treasury  on  a  drawing  account  or 
as  a  deposit;  the  total  of  such  funds,  according  to  latest 
statistics,^  reaches  1,060,000,000  francs.  Among  the  funds 
turned  into  the  Treasury,  either  compulsorily  or  optionally, 
may  be  mentioned :  the  available  funds  for  municipalities  and 
departemcnts;  the  funds  which  the  Credit  Foncier  must  depos- 
it by  virtue  of  its  by-laws ;  the  funds  of  the  savings  banks ;  of 
the  old-age  pension  fund ;  of  the  Caisse  des  Depots  et  Con- 
signations; of  the  invalid  sailors'  fund;  of  the  army  corps; 
the  special  funds  of  the  treasurers  general,  etc.  The  majority 
of  these  funds  bear  interest.  Only  the  sum  of  173,866,000 
francs  does  not  bear  interest,  particularly  the  available  funds 
of  the  budgets  of  the  depart ements,  l^ecause  the  departements 
have  free  of  charge  the  services  of  the  treasurers  general  in 
connection  with  the  execution  of  their  budgets. 

The  second  element  of  the  floating  debt  is  composed  of 
bonds  issued  by  the  Treasury  within  the  600,000,000  franc 
limit  authorized  by  the  fiscal  law ;  the  Treasury  bonds  in  cir- 
culation total,  according  to  the  latest  statistics,  336,000,000.  an^Element 
The  bonds  of  the  Treasury  have  already  been  studied  and  de- 
fined in  Chapter  IX.  By  adding  their  total  to  that  of  the 
funds  in  the  drawing  accounts  and  on  deposit,  the  grand  total 
of  1,395,000,000  is  obtained.  This  constitutes  the  floating 
debt,  according  to  the  latest  statistics. 

These  facts  ^  relating  to  the  Treasury,  which  must  of  neces- 
sity be  somewhere  inserted  in  a  book  dealing  with  the  budget, 
will  enable  us  to  treat  more  intelligently  the  subject  of  ''Spe- 
cial Activities  of  the  Treasury,"  which  in  former  times  con- 
stituted a  special  section  of  the  fiscal  law. 

^  Condition  of  the  floating  debt  on  April  i,  1912,  published  in  the 
annex  of  the  statement  of  supporting  arguments  of  the  budget  for 

2  The  subject  of  the  Treasury  is  treated  in  this  connection  only  in  a 
summary  way,  because  more  extensive  comments  which  this  subject 
would  imply  will  be  found  in  the  portion  of  the  work  which  deals  with 
public  credit. 

271 


THE  BUDGET 


The  Cash 
Bonds 


Special 
Accounts 


The  Way 
to  the 
Treasury 


In  themselves,  and  as  far  as  their  origin  is  concerned,  The 
Special  Activities  of  the  Treasury  do  not  invite  criticism. 
They  are  accounts  opened  in  the  ledger  in  view  of  the  con- 
tinuation of  works  in  which  the  various  operations  of  the 
Treasury  are  interested;  the  public  accounting  service  holds 
the  privilege  of  opening  as  many  accounts  for  additions  and 
betterments  as  it  may  deem  useful. 

For  instance,  the  cash  bonds — furnished  by  incumbents 
of  offices  which  require  such  guarantee — now  reach  the  total 
sum  of  117,481,000  francs.  Therefore,  nothing  is  more  legit- 
imate than  to  carry  in  a  special  account  this  indebtedness 
of  the  Treasury  and  to  trace  over  again  the  periodical  fluctu- 
ations of  deposits  and  withdrawals.^  It  seems  equally  useful, 
since  the  budget  on  special  resources  was  abolished,  to  open 
an  account  among  the  special  activities  of  the  Treasury  for 
the  Direct  taxes  and  other  similar  taxes  collected  for  the  de- 
partements  and  the  municipalities.  In  these  accounts  are 
entered  all  funds  not  belonging  to  the  State,  together  with 
their  disbursements.  As  the  law  has  also  assigned  certain 
special  allotments  to  the  "pool"  {pari  mutuel)  and  to  the  ac- 
count carrying  the  proceeds  of  the  "tax  on  the  manufacturing 
of  alcohols  for  industrial  purposes,"  it  is  only  natural  that 
special  accounts  follow  such  application  in  order  to  satisfy 
themselves  that  the  legal  provisions  are  properly  observed, 
etc.  These  accounts  no  one  could  criticize  as  they  are  of  a 
routine  nature,  and  which  one  might  call  immaterial,  as  com- 
pared with  others  with  which  we  shall  deal. 

Under  cover  of  immaterial  accounts,  other  accounts  ap- 
parently of  the  same  nature,  intended  to  favor  or  to  facilitate 
the  extension  of  expenditures,  beyond  the  check  imposed  by 
the  budgets,  have  been  established.  The  budgetary  appro- 
priations are  always  more  or  less  affected  by  the  necessities 
of  the  equilibrium.  In  the  Treasury,  on  the  contrary,  there 
is  an  abundance  of  funds,  if  only  they  can  be  reached.  This 
cannot  be  left  open  to  everybody;  some  pretext  is  necessary 
in  order  to  be  admitted. 

1  The  figure  of  the  credit  balance  of  the  special  service  of  cash 
bonds  varies  on  accotint  of  the  numbers  of  the  incumbents,  the 
changes  in  the  determining  of  rates  and,  above  all,  the  fiscal  period 
v^hich  continues  to  develop  on  account  of  the  ^ right  to  give  bonds 
in  securities  instead  of  in  cash,  as  was  authorized  by  the  law  of 
March  29,  1898.  Hence  the  annual  fluctuation  which  made  the 
credit  balance  drop  from  310,000,000  in  1896  to  301,000,000  in  1900, 
to  248,929,000  in  1905  and  to  117,000,000  at  the  present  time. 

272 


THE  TREASURY— SPECIAL  FEATURES 

The  pretext  is  as  follows:  certain  operations  give  promise  vicious 
to,  or  appear  to  give  promise  to,  yield  revenues  which  may  Treasury 
some  day  cover  present  expenditures.     What  is  the  use,  it     ^^'^  *°"^ 
is  said,  of  encumbering  the  budgets  with  their  figures?    They 
are  simple  activities  of  the  Treasury,   temporary  activities, 
which  will  tomorrow  be  restored  to  the  Treasury  and  will 
disappear.     According  to  the  definition  given  at  the  begin- 
ning, they  draw  directly  from  the  Treasury  and  outside  of 
the  budgets  the  resources  which  they  temporarily  need  until 
the  revenues  balance  expenditures.    A  few  examples  will  show 
not  only  the. process,  but  also  the  failure  of  the  expected  reve- 
nues to  cover  present  expenditures.     Present  expenditures 
only  are  certain. 

The  "loans  made  to  industries" — put  into  effect  by  virtue  Loans  to 
of  the  law  of  August  i,  i860,  which  was  the  result  of  a  com-  Industries 
mercial  treaty,  loans  which  have  to  be  repaid  by  the  interested 
parties  as  their  name  indicates — from  the  beginning  were  clas- 
sified among  special  activities.  There  is  nothing  more  legiti- 
mate than  such  a  classification,  it  was  said,  because  the  36,- 
840,166  francs  which  were  loaned,  in  all  probability  would 
some  day  come  back  in  full;  there  was  only  the  question  of 
waiting  and  carrying  the  item  in  a  suspense  account.  Unfor- 
tunately, the  reimbursements  were  not  forthcoming  as  antici- 
pated, and  on  December  31,  1886,  11,855,819  francs  were  still 
outstanding.  The  law  of  March  30,  1888,  declaring  9,716,878 
francs  of  the  above  as  irrecoverably  lost,*  ordered  the  item  car- 
ried to  profit  and  loss  by  including  it  among  the  dec  Oliver  ts  of 
the  Treasury;  only  2,141,941  francs  were  held  in  the  special 
activities  account,  which  sum  had  been  reduced  to  720,183 
francs. 

"The  Greek  loan,"  now  cancelled  irom  the  list  of  special  xhe  Greek 
activities,  held  its  place  there  for  a  long  while,  owing  to  the  Loan 
same  idea.  In  1832  Russia,  England  and  France  jointly  guar- 
anteed the  loan  of  100,000,000  francs  contracted  by  the  Greek 
Government.  The  loan  once  secured,  Greece  failed  to  pay 
the  interest :  France,  being  obligated  to  the  extent  of  one-third 
of  the  amount,  had  to  advance  successively  3,793,277  francs 
out  of  its  own  funds.  In  1857  an  International  Commission 
stipulated  that  Greece  should  reimburse  these  advances  by 
instalments  of  900,000  francs  per  annum,  one-third  of  which 
should  be  paid  to  France ;  but  this  sum  of  900,000  francs  was 
reduced  to  600,000  francs  in  order  to  provide  a  civil  list  for 
King  George  I  in  the  sum  of  300,000  francs  (agreement  of 

273 


THE  BUDGET 


The  De- 
fences of 
Calais 


Dangerous 
Law  of 
February, 
i8q8 


January  5,  1864).  The  amounts  due  to  France  under  this 
new  arrangement  were  regularly  paid.  But,  in  1886,  at  the 
end  of  twenty  years,  the  accumulated  instalments  reached 
a  total  of  4,000,000,  which,  together  with  some  previous  pay- 
ments, left  an  outstanding  balance  of  27,094,000  francs.  At 
this  rate,  it  would  take  Greece  135  years  to  discharge  its  obli- 
gation; 135  years,  added  to  the  33  years  already  elapsed, 
would  give  to  this  special  operation  a  duration  of  168  years! 
What  has  become,  then,  of  its  temporary  character?  In 
1887,  accordingly,  it  was  resolved  definitely  to  cancel  the 
Greek  loan  from  the  accounts  of  the  Treasury.  (Article  4 
of  the  fiscal  law  of  February  26,  1887.) 

The  ^'reorganization  of  the  defenses  of  Calais"  constitutes 
a  type  of  the  special  activities,  which  can  be  easily  under- 
stood. According  to  the  original  estimates,  the  grounds, 
occupied  by  the  new  defenses,  were  expected  to  cost  an  amount 
equal  to  the  proceeds  from  the  sale  of  the  land  covered  by 
those  which  were  being  abandoned.  Why,  therefore,  it  was 
asked,  should  the  economy  of  future  budgets  be  troubled  with 
credit  and  debit  entries,  when  finally  the  expenditures  and 
the  receipts  would  equalize  each  other?  The  law  of  April 
21,  1879,  proposed,  therefore,  that  the  operation  in  question 
should  be  classified  among  the  special  operations  of  the  Treas- 
ury, where  the  14,000,000  francs  of  estimated  expenditures 
would  be  charged  gradually  against  the  proceeds  from  the 
land  sales.  Unfortunately,  in  this  connection  also,  the  opera- 
tion ended  in  a  disappointment.  At  the  close  of  1899,  after 
twenty  years,  the  special  account  was  closed  with  a  deficit  of 
7,562,000  francs  (law  of  December  26,  1889).  The  expendi- 
tures reached  the  amount  of  8,227,000  francs,  but  the  revenues 
reached  only  664,000.     - 

One  of  the  more  dangerous  of  recent  special  activities  is 
that  inaugurated  surreptitiously  under  the  law  'of  February 
17,  1898.  It  is  entitled:  "Improvement  in  the  material  of 
armament  and  the  rehabilitation  of  military  establishments," 
the  debits  for  which  increased  daily,  while  no  actual  assets 
could  be  credited  to  it.  The  main  hope  for  the  ultimate  liqui- 
dation lay  in  the  values  of  the  land  occupied  by  the  antiquated 
fortifications  of  Paris,  the  sale  of  which,  however,  had  not 
begun,  nor  had  preparation  even  been  made  for  it.  Tem- 
porarily, expenditures  were  met  by  an  issue  of  Treasury 
Bonds.  Thus,  the  old  extraordinary  budgets  were  reestab- 
lished.    ' 

274 


THE  TREASURY— SPECIAL  FEATURES 

The  Minister  of  Finance  suggested  the  definite  closing  of 
this  deceptive  account,  and  this  was  done  under  the  law  of 
December  30,  1900.  No  new  expenditure  is  any  longer 
charged  against  this  special  account  of  armament.  But  a 
debit  balance  of  185,000,000  francs  still  remains  with  no  off- 
setting assets. 

Among  the  special  activities  running  over  a  long  time,  of  Advances 
a  rather  dangerous  nature,  are  those  inuring  to  the  benefit  ^^^^^^°^^> 
of  the  "funds  of  neighborhood-roads"  and  of  "educational 
establishments."  These  activities  were  originated  for  the  pur- 
pose of  furnishing  the  departements  and  the  municipalities 
with  advances  of  money  and  with  subsidies.  After  they  had 
absorbed  almost  1,000,000,000  francs,  the  expediency  of  their 
being  closed  as  soon  as  possible  was  realized;  this  was  done 
by  a  law  of  July  26,  1893,  effective  January  i,  1894.  In  their 
stead  was  opened  a  single  account  under  the  heading,  "Liqui- 
dation of  advances  of  funds  to  neighborhood-roads  and  edu- 
cational establishments,"  which  account  had  entered  on  its 
debit  side  all  the  charges  of  former  times,  which  now  amount 
to  24,619,000  francs. 


Guarantees  of  Interest  to  Railroad  Companies 

Many  other  examples  might  be  quoted.  But  let  us  hasten 
to  consider  the  "Guarantees  of  interest  to  railroad  companies," 
which  caused,  between  1885  and  1893,  the  opening  in  the  fiscal 
law  of  a  section  under  the  title,  "Special  activities  of  the 
Treasury." 

The  matter  of  the  guarantee  of  interest  is  annually  pre- 
sented as  follows  in  the  General  Financial  Statement :  The  Terms 

of  the 

"By  virtue  of  the  articles  of  agreement  made  with  the  Guarantee 
•  Railroad  Companies,  the  payments,  by  the  State  to  these 
Companies  as  guarantees  of  interest,  are  advances  on  the 
net  proceeds  of  the  lines  to  which  the  guarantee  applies, 
and  ar^  to  be  repaid  to  the  State  together  with  interest 
at  4  per  cent  as  soon  as  the  net  proceeds  exceed  the  guar- 
anteed interest." 

As  set  out  in  the  general  statement,  payments  on  the  guar- 
antee constitute  advances  of  money,  which  the  companies  must  Objec- 
reimburse  the   State,  together  with  interest,  during  the  life  Jjo^able 
of  their  franchises,  if  their  revenues  permit,  or  at  the  expira- 

275 


THE  BUDGET 


Two  New 
Accounts 


Repeal   of 
the  Law  on 
Guarantee 


tion  of  their  franchises.  It  was  this  idea  of  advances  which 
in  1885  gave  rise  to  the  classification  of  the  guarantees  of 
interest  among  the  special  activities  of  the  Treasury.  It  was 
argued  that,  since  the  actual  outlay  was  to  be  reimbursed,  why 
should  the  current  budgets  be  encumbered  with  charges,  the 
equivalent  of  which  in  revenues  would  some  day  augment  the 
budgets  of  following  generations.  The  operation  only  upsets 
the  arrangement  of  the  fiscal  law.  Would  it  not  be  better 
to  eliminate  it  and  to  classify  it  separately  with  the  Treasury 
which  temporarily  provides  the  funds?  The  law  of  August 
8,  1885,  relating  to  the  budget  for  1886,  as  a  result  of  this 
reasoning,  stipulated  in  section  V,  article  14,  "there  shall  be 
opened  among  the  special  activities  of  the  Treasury  two  ac- 
counts under  the  following  headings:  Advances  to  French 
Railroad  Companies  for  guarantees  of  interest,  and  Advances 
to  Railroad  Companies  of  Algiers  for  guarantees  of  interest." 

Not  only  did  those  two  new  accounts  appear  in  our  ac- 
counting system,  but  the  fiscal  law  itself  deemed  it  necessary 
to  include  them,  by  devoting  to  them  a  special  section  under 
the  heading,  "Special  activities  of  the  Treasury,"  which  would 
regulate  annually  their  footings.  This  constituted  a  budget- 
ary anomaly,  which  is  later  discussed.  Since  then,  the  ordi- 
nary expenditures  have  each  year  been  reduced  by  from  70,- 
000,000  to  80,000,000 ;  here  lay  the  only  true  motive  inspiring 
the  innovation;  the  rest  was  subterfuge.  Above  everything 
else  the  Government  wanted  a  paper  balance :  "There  is  ground 
for  belief,"  admitted  the  deputy  who  reported  on  the  subject, 
"that  the  guarantee  would  not  have  grown  out  of  the  budget 
for  1886  if  the  ordinary  revenues  had  been  sufficient  to  pay 
them." 

Thus,  as  soon  as  the  growth  of  surpluses  permitted,  the 
idea  of  budgetary  unification  again  gained  the  upper  hand. 
In  the  budget  of  1892,  the  Minister  of  Finance  suggested  the 
abolition  of  that  portion  relating  to  the  railroads  of  Algiers; 
the  Commission  on  Budget  completed  the  measure  by  also 
eliminating  the  guarantees  of  interest  to  French. railroads,  so 
that  the  fiscal  law  of  1893  repealed  the  special  section  inaugu- 
rated in  1885  after  seven  years  of  existence.^ 


1  This  section  of  special  activities  lasted  in  fact  only  six  years.  If 
the  budget  for  1892  still  contained  a  section  IV  under  the  caption 
"Special  Activities,"  the  latter  had  a  new  meaning.  In  the  budget 
for  1893  this  section  disappeared  completely. 

After  having  been   eliminated    from   the   fiscal   law,   the    former 

276 


THE  TREASURY— SPECIAL  FEATURES 

If  we  now  look  for  the  reason  why  the  special  activities 
relating  to  the  guarantees  of  interest  were  entered  in  the  body 
of  the  fiscal  laws  from  1886  to  1892,  we  must  reply  that 
it  was  due  to  a  certain  kind  of  honesty — very  laudable,  by  the 
way,  on  the  part  of  those  who  prepared  the  budget — who, 
anxious  to  pay  tribute  to  the  principle  of  budgetary  unity, 
refused  to  hide  the  guarantees  of  interest  in  the  customary 
obscurity  of  Treasury  accounts,  without  informing  the  legis- 
lature. By  placing  them  in  the  very  body  of  the  budget,  they 
attracted  the  attention  of  the  representatives  of  the  country  Excuses  for 
who  lost  no  time  in  abolishing  them.  It  is  highly  desirable  ^P^^p'^l 
that  the  same  fate  wait  on  other  special  activities,  which  are 
but  a  sort  of  parasite,  the  existence  of  which  is  favored  by 
the  obscurity  surrounding  them  and  which  a  Minister  of 
Finance,  in  his  statement  of  supporting  arguments  of  the 
budget  for  1900,  characterized  as  follows: 


"The  accounts  of  special  activities  are  pernicious ;  their 
use  borders  on  abuse,  and  puts  the  State  on  particularly 
slippery  ground.  We  have,  therefore,  tried  to  abolish  the 
majority  of  these  accounts,  the  reasons  for  the  existence 
of  which  are  not  clear  and  the  existence  of  which  to  us 
appears  to  have  no  other  result  than  the  obscuring  of  our 
accounting  system;  while  in  a  free  land  in  which  public 
opinion  reigns  supreme,  it  is  necessary  that  the  accounts 
of  the  State  be  clear  in  every  detail,  and  that  the  legis- 
lature and  the  public  be  able  to  understand  the  finances." 


Special 

Activities 

Pernicious 


special  activity  of  interest  guarantee  now  exists  among  the  accounts 
of  the  Treasury,  but  it  is  exclusively  devoted  to  showing  the  move- 
ment of  the  indebtedness  of  the  companies  to  the  State  and  no  longer 
uses  funds  of  the  Treasury.    It  is  a  harmless  account. 


277 


PART  II 
VOTING  THE   BUDGET 


CHAPTER  XII 

LEGISLATIVE  COMMISSIONS   ON   BUDGET— PUB- 
LIC DISCUSSION 

The  French  Method  of  Voting  the  Budget :  Legislative  Commissions 
[or  Committees] — Open  or  Closed  Doors:  The  Legislative  Com- 
missions Are  Appointed;  The  Budget  Commission;  Varying  Rules 
as  to  Meetings;  The  English  Plan;  In  the  United  States. 

The  Permanency  of  Legislative  Commissions  [Committees]  in  the 
United  States  and  in  France  During  the  Revolution:  The  Com- 
mittees of  the  Constitutional  Assembly;  Necker;  Changes  Under 
the  Legislative  Assembly;  The  Extremes  of  the  Convention;  The 
Assembly  of  1848;  Difficulties  to  Be  Overcome;  Conflict  Between 
the  Executive  and  Commission ;  The  Weak  Spot ;  Reports  Pre- 
pared by  the  Legislative  Commissions  [or  Committees]  ;  Multi- 
plicity of  Reports ;  The  Results ;  The  Discussions  on  the  Fiscal 
Law;  The  General  Discussion  of  the  Bill;  The  Tenor  of  the  De- 
bates; Topics  Debated;  Three  Classes  of  Speakers;  The  Discussion 
by  Article. 

The  budget  plan,  once  submitted  to  the  Chamber,  leaves  the 
hands  of  the  Executive  and  goes  to  the  legislature  whose  duty 
it  is  to  vote  on  it. 


The  French  Method  of  Voting  the  Budget 

Voting  the  budget  is  too  important  an  operation  to  be  per- 
formed by  the  representative  body  without  due  consideration. 
Between  the  time  the  budget  plan  is  submitted  and  the  time 
the  fiscal  law  is  voted,  periods  of  preparatory  inquiry  must 
necessarily  lapse.  There  are  two  phases  of  inquiry,  viz. : 
first,  the  study  and  the  revision  of  the  budget  plan  by  the  com- 
mission on  budget;  and  then  the  public  discussion  before  the 
entire  assembly.    A  commission  [or  committee]  on  budget  and 

279 


THE  BUDGET 

public  discussion  can  be  found  under  one  form  or  another 
in  all  countries  having  a  parliamentary  form  of  government. 


How  Leg- 
islative 
Commis- 
sions Are 
Appointed 


The  Budget 
Commis- 
sion 


Legislative    Commissions    [or    Committees] — Open    or 

Closed  Doors 

As  soon  as  the  budget  plan  is  submitted,  the  president  of 
the  Chamber  of  Deputies  pronounces  the  following  formula: 
"The  budget  plan  shall  be  printed,  distributed  and  turned  over 
to  the  bureaus/' 

The  bureaus  do  not  form  as  yet  the  commission  on  budget, 
but  they  furnish  means  for  its  appointment.  The  Chamber 
of  Deputies,  in  fact,  according  to  its  rules,  divides  its  mem- 
bers periodically  into  eleven  bureaus  or  groups,  the  composi- 
tion of  which  is  determined  each  month  by  lot.  These  bureaus 
examine  the  bills  which  are  sent  to  them,^  and,  after  a  casual 
discussion,^  they  designate  a  certain  number  of  members  to 
study  them.  In  general,  one  commissioner  is  appointed  by 
each  bureau;  the  legislative  commissions  are,  therefore,  com- 
posed of  eleven  members. 

As  far  as  the  budget  is  concerned,  its  greater  importance 
causes  the  appointment  of  four  commissioners  for  each  bu- 
reau, so  that  the  commission  on  budget  consists  of  forty-four 
members.^  In  1887,  by  way  of  exception,  the  entire  Chamber 
elected  the  members  of  the  commission  on  budget  by  a  viva 
voce  vote.  (Resolution  of  April  2,  1887.)  The  following 
year,  however,  after  having  compared  the  merits  of  both 
methods,  the  Assembly  returned  to  the  old  defective  system. 
The  partisans  of  the  viva  voce  vote  contended  that  "the  study 
and  the  voting  of  the  budget  being  the  greatest  political  action 
of  an  assembly,"  it  was  perfectly  justified  in  giving  the  most 
solemn  form  to  the  appointment  of  the  commission.  The  op- 
ponents replied  that  "if  the  study  and  the  voting  of  the  budget 
constitutes  the  most  important  act  which  the  legislature  can 
undertake,  there  is  certainly  no  reason  for  depriving  this  act 
of  a  guarantee  given  to  all  plans  or  bills,  that  is,  a  previous 
discussion  in  the  bureaus."     (Chamber  of  Deputies,  session 

^  Unless  a  Commission  which  is  already  working  is  occupied  by  the 
same  question  or  by  analogous  questions. 

2  See  the  discussion  in  the  Chamber  of  Deputies,  February  17,  1891, 
on  the  subject  of  the  inadequacy  of  the  work  of  the  bureaus, 

3  Regulation  of  July  7,  1911.    For  1913  the  powers  of  the  commis- 
sion of  .1912  ^ye^e  continued  in  order  to  gain  time. 

280 


LEGISLATIVE  COMMISSIONS  ON  BUDGET 

of  June  26,  1888.)  ^  Regardless  of  the  method  of  electing  its 
members,^  the  commission  on  budget  in  accordance  with  the 
purpose  of  the  institution,  may  be  defined  as  follows:  The 
Commission  [Committee]  on  Budget  is  a  group  of  the  mem- 
bers of  the  Chamber,  having  special  charge  of  studying  the 
budget  plan  and  of  submitting  suggestions  on  the  subject  be- 
fore the  pubHc  discussion  is  opened. 

This  definition  applies  to  all  countries  having  a  parliament- 
ary form  of  government,  because,  wherever  the  voting  of  the 
budget  rests  with  the  representatives  of  the  nation,  a  special 
committee,^  less  numerous  than  the  general  assembly,  is  en- 
trusted with  the  mission  of  studying  its  details  before  the  pub- 
lic discussion  is  opened.  Only  the  forms  vary,  whether  the 
meetings  are  public  or  not,  or  whether  the  commissions  are 
permanent  or  otherwise. 

As  to  the  publicity  of  the  sessions  of  the  commissions  [or   Varying 
committees]  on  budget,  no  reference  is  made  to  the  admis-   ^"Jj,^  ^? 
sion  of  the  public  at  large.    The  latter  is  everywhere  excluded.    *°     eetmgs 
The  meetings  can  at  most  only  be  opened  or  closed  to  all 
members  of  the  assembly  without  distinction;  they  can  thus 
be  open  or  closed. 

In  France  no  deputy,  except  those  elected  by  the  bureaus, 
enters  the  meeting-room  of  the  commissions,  even  as  a  lis- 
tener.   The  same  is  the  case  *  in  the  majority  of  countries  of 

^  Recently  a  motion  was  adopted  by  the  Chamber  by  virtue  of  which 
the  commission  on  budget  is  appointed  immediately  after  the  draw- 
ings of  lots  by  the  bureaus,  within  the  same  quarter  of  an  hour,  in  or- 
der not  to  leave  any  time  for  partisan  intrigues  to  develop. 

2  The  resolution  of  July  7,  191 1,  which  reestablished  the  election  by 
bureaus,  is  worded  as  follows:  "A  commission  of  44  members  ap- 
pointed by  the  bureaus  is  put  in  charge  of  examining  the  law  on 
revenues  and  expenditures."  The  discussion  which  preceded  that  vote 
is  instructive. 

^  The  works  on  foreign  constitutions  furnish  all  the  desired  infor- 
mation with  regard  to  the  appointment  of  commissions  on  budget  in 
various  countries.  Besides,  the  Cobden  Club  in  1878  organized  an 
inquiry  into  the  "control  of  budget  in  the  various  countries"  and 
published  in  a  book  the  replies  of  all  of  its  correspondents. 

More  recently  the  consuls  of  the  United  States  have  furnished 
their  government  with  a  series  of  reports  on  legislation  relating  to 
foreign  budgets,  published  under  the  following  title:  Reports  of 
United  States  consuls  on  budgets  and  budget  legislation  in  foreign 
countries,  March,  1888. 

See  also,  De  la  preparation  des  lois  dans  les  Commissions  parle- 
mentaires,  by  M.  Henry  Labbe,  Paris,  1901. 

*In  Belgium  attempts  have  been  made  either  to  make  public  the 

281 


lish  Plan 


THE  BUDGET 

the  Continent,  with  the  exception  of  Austria,  where  all  the 
members  of  the  Reichsrath  may  attend,  if  they  so  desire,  the 
meetings  of  the  committee  on  finance. 

In  England,  on  the  contrary,  as  soon  as  the  budget  plan  is 
submitted  by  the  Government,  a  committee,  composed  of  all 
the  members  of  the  House  of  Commons  who  wish  to  be  pres- 
ent, undertakes  the  study  of  the  budget  plan.  Those  who  pos- 
sess an  aptitude,  special  liking  and  particular  qualifications  for 
financial  matters,  as  a  matter  of  course,  join  this  committee, 
which  takes  the  name  of  the  "Committee  of  the  Whole  House" 
["of  Supply,"  while  considering  the  detailed  estimates  for 
expenditure,  and  the  "Committee  of  the  Whole  House  on 
Ways  and  Means,"  while  considering  the  budget  or  plan  of 
financing  the  Government's  needs].  In  order  to  constitute 
this  committee  a  simple  action  of  parliamentar}^  procedure,  a 
simple  motion  is  required,  viz. :  "The  Speaker  will  now  leave 
TheEng-  the  chair."  After  the  House  has  given  its  consent,  the 
Speaker  leaves  his  chair,  the  mace  is  placed  under  the  table 
and  another  president,  designated  by  his  colleagues,  conducts 
the  discussion  under  the  name  of  chairman.  The  session  con- 
tinues without  further  interruption,^  only  the  members  pres- 
ent are  less  numerous  and  the  discussion  has  a  less  solemn 
but  a  more  practical  tone;  everybody  expresses  himself 
frankly,  in  a  businesslike  way,  taking  the  floor  at  diflFerent 
times,  which  is  forbidden  during  the  general  session.  After 
the  resolutions  are  taken,  the  chairman  recapitulates  them  in 
an  oral  report  to  the  House  convened  again  under  the 
Speaker.^     The  budgetary  committees  of  the  entire  Chamber 

work  of  the  commission,  which  is  called  the  central  section  on 
budget,  or  to  bring  into  this  commission  the  representatives  of  the 
minority.  Besides,  the  institution  of  the  EngHsh  "committee  of  the 
whole  house"  has  been  suggested.  (Report  to  the  Chamber  of  Rep- 
resentatives of  Belgium,  made  by  M.  Pirmez  April  13,  1888.) 

^  The  fine  work  of  M.  de  Franqueville,  Le  Gouvernement  et  le  Par- 
lement  britanniques,  furnishes  valuable  information  on  the  subject. 
The  book  of  Mr.  Erskine  May,  The  Constitutional  History  of  Eng- 
latid,  has  already  shown  this  parliamentary  procedure.  M.  de 
Franqueville  has  not  only  availed  himself  of  the  written  works  of 
Mr.  Erskine  May,  but  has  taken  advantage  of  the  personal  sugges- 
tions of  this  eminent  "clerk"  of  Parliament. 

2  No  written  report  is  drafted,  no  document  is  printed.  Our 
voluminous  annual  statements  are  unknown  in  England.  As  soon 
as  the  committee  of  the  whole  house  has  finished  examining  the  spe- 
cial subject  which  was  the  cause  of  its  meeting,  the  House  convenes 
in  general  session  under  the  presidency  of  the  Speaker  and  the  chair- 

^82 


LEGISLATIVE  COMMISSIONS  ON  BUDGET 

[Committee  of  the  Whole  House]  constitute  the  opposite  of 
our  closed  and  exclusive  commissions,  because  all  members 
of  the  House  of  Commons,  without  election,  without  special 
commission  and  without  any  distinction  can  take  part  in 
them.  This  remarkable  system  has  often  attracted  public  at- 
tention in  France. 

In  the  United  States  the  committees  of  the  whole  house   In  the 
work  under  the  same  conditions  as  in  England,  whence  they    ^^^^^ 
were  introduced.     These  committees,  however,  do  not  inter- 
est us  as  much  because  the  budget  plan  does  not  reach  them 
at  once  as  is  the  case  in  England.^     Before  the  committee  of 

man  limits  himself  to  indicating  orally  the  resolutions  which  were 
adopted  by  the  committee.  "The  chairman  of  the  Committee  then 
approaches  the  chair  of  the  Speaker  and  reports  in  the  name  of  the 
Committee  either  that  the  Committee  has  examined  the  bill  in  its 
totaHty  and  has  made  amendments  or  that  the  Committee  has  ex- 
amined the  bill  in  its  totality  and  has  ordered  him  to  report  on  the 
bill  without  amendments."     (Count  de  Franqueville,  idem.) 

^  [Stourm  has  not  brought  out  the  essential  difference — the  real 
reason  why  the  "committees  of  the  whole  house"  in  our  Congress 
"do  not  interest  us  as  much"  as  do  the  meetings  of  the  committee 
of  the  whole  in  the  English  Parliament  when  sitting  as  a  "committed 
of  supply"  or  as  a  "committee  of  ways  and  means."  The  essential 
difference  is  this:  soon  after  Parliament  meets,  it  has  laid  before 
it  in  printed  form  the  detailed  Estimates,  for  which  the  Executive 
stands  sponsor,  for  critical  examination  with  the  heads  of  depart- 
ments present  to  answer  the  questions  of  members.  Then  they  take 
up  these  estimates  initially,  one  after  another,  in  committee  of  the 
whole  house,  giving  full  opportunity  for  inquiry  and  discussion,  after 
which  each  total,  which  is  to  appear  as  an  item  of  appropriation, 
is  put  to  a  vote.  In  the  United  States,  while  printed  estimates  are 
put  into  the  hands  of  members  of  Congress  early  in  the  session,  the 
executive  does  not  stand  sponsor  for  them ;  they  are  not  taken  up 
one  after  another  in  committee  of  the  whole  with  heads  of  depart- 
ments present;  they  are  divided  up  and  referred  to  various  commit- 
tees where  weeks,  perhaps  months,  are  consumed  in  the  study  of  de- 
tails. While  this  discussion  is  going  on  in  committee,  there  is  noth- 
ing in  which  the  public  can  interest  itself;  even  the  members  of  the 
committee  do  not  know  what  the  proposal  will  be  when  it  is  reported 
out;  in  fact  there  is  nothing  before  Congress  till  the  committee  re- 
ports its  bill,  which  is  never  an  executive  plan  or  proposal,  but  that 
of  a  partisan  majority  of  the  standing  committee  to  which  this  sec- 
tion of  the  estimates  has  been  referred.  By  the  British  practice  fully 
two  months  is  given  to  members  of  Parliament  to  ask  questions  and 
inform  themselves  about  the  details  of  Estimates  for  expenditure  be- 
fore the  "budget"  or  plan  for  financing  the  next  fiscal  year  is  sub- 
mitted. Then  this  "budget"  or  plan  is  taken  up  in  committee  of  the 
whole,  where  the  revenue  and  borrowing  proposals  can  take  the  same 
gQurs^  as  have  th^  Estimates.    In  the  United  States  no  financial  plan 

383 


THE  BUDGET 

the  whole  meets,  special  committees  appointed  within  the 
Federal  Congress  have  prepared  the  plans  of  the  fiscal  law; 
this  system  gives  them  in  a  more  precise  way  the  character 
of  a  commission  on  budget.  As  these  are  standing  com- 
mittees, we  must  study  them  from  this  second  point  o! 
view. 


The   Permanency   of   Legislative   Commissions    [Com- 
mittees] IN  THE  United  States;  and  in  France 
During  the  Revolution 

In  France  a  commission  on  budget  of  the  Chamber  of  Depu- 
ties begins  its  functions  with  each  budget  and  the  financial 
commissions  of  the  Senate  are  also  annual.^ 

In  the  United  States,  on  the  contrary,  from  the  opening  of 
Congress  and  during  its  session,  the  Speaker  assigns  the  study 
of  public  affairs  to  permanent  committees  of  which  he  desig- 
nates the  members.-  These  committees  justify  their  charac- 
ter of  permanency  by  the  very  nature  of  the  functions  en- 
trusted to  them ;  a  portion  of  the  executive  power  is  vested  in 

is  submitted,  but  one  fragment  after  another  is  reported  out  inde- 
pendently by  the  different  standing  committees  and  usually  near  the 
end  of  the  session;  no  opportunity  is  given  to  members  to  question 
responsible  executives  on  the  floor;  both  Congress  and  the  country 
are  kept  in  the  dark  until  finally,  one  after  another  of  the  finance 
bills  appear,  no  one  except  a  select  few  having  a  chance  to  under- 
stand them;  then  they  go  through  the  formality  of  a  committee  of 
the  whole  procedure.  With  the  English  practice  Parliament  takes  on 
the  character  of  a  real  forum;  with  the  American  procedure  Con- 
gress devises  its  work  secretly,  then  gives  the  floor  for  a  few  hours 
to  members  who  desire  to  make  "stump  speeches."  The  English  pro- 
cedure is  a  device  for  giving  publicity  and  enforcing  accountability 
for  the  acts  and  proposals  of  executive  officers;  the  Amerian  pro- 
cedure has  been  designed  to  perpetuate  and  perfect  what  has  come 
i^  to  be  known  as  "Invisible  Government." — The  Editor] 

^  If  the  Senate,  before  appointing  its  commission,  should  wait  until 
the  fiscal  bill  voted  by  the  Chamber  of  Deputies  was  submitted,  the 
latter  would  lose  on  this  formality  the  little  time  that  was  left.  There- 
fore the  Senate  at  the  very  beginning  of  the  year  designates  the  mem- 
bers of  the  commission  which  shall  have  charge  of  officially  follow- 
ing the  discussions  of  the  deputies  and  preparing  its  report  in  advance. 

2  This  designation  of  the  members  of  the  committees  by  the  Speaker 
gives  rise  to  much  abuse.  The  Speaker,  who  is  in  general  a  party 
man,  takes  care  to  compose  the  important  committees  in  such  a  way 
that  the  opposing  political  party  can  exercise  little  influence;  in  fact, 
he  confines  the  party  in  opposition  to  committees  which  have  com- 
paratively small  importance. 

284 


LEGISLATIVE  COMMISSIONS  ON  BUDGET 

them.  Particularly  with  regard  to  financial  matters,  the  com- 
mittee on  appropriations  possesses  the  initiative  to  a  certain 
extent,  as  has  been  said  before.^  In  fact,  the  Secretary  of  the 
Treasury  submits  his  estimates  to  this  committee.  This 
standing  committee  on  appropriations,  however,  revises  these 
estimates  as  its  own  and  prepares  the  budget  in  its  essential 
outlines.  The  committee  summons  the  Secretary  of  the  Treas- 
ury and  the  chiefs  of  the  various  services  to  appear  before 
them;  they  cooperate  with  the  members  of  other  standing  com- 
mittees which  are  in  charge  of  permanently  supervising  the 
business  of  the  executive  departments  for  the  purpose  of  de- 
termining the  expenditures.  It  finally  presents  the  general 
budget  plan  to  the  House  of  Representatives.  Later  this  com- 
mittee defends  the  budget  plan  before  the  House,  which  ex- 
cludes from  the  floor  the  Secretary  of  the  Treasury  [and  all 
other  executive  heads].  The  legislative  committees  in  the 
United  States,  thus  equipped  with  executive  powers,  possess 
quite  justly  the  prerogative  of  permanency.^ 

But  we  do  not  need  to  go  to  the  United  States  to  find  ex- 
amples of  permanent  committees;  we  can  find  them  in  our 
own  history. 

1  See  Chapter  III.  ^ 

2  [While  the  author's  assumption  is  quite  true  that  the  standing 
committees  of  Congress  which  prepare  the  various  finance  bills  are 
exercising  executive  functions,  a  fact  which  President  Wilson  com- 
mented on  in  his  "Congressional  Government,"  the  impression  is 
given  that  all  the  estimates  are  considered  and  all  the  finance  bills 
are  prepared  by  the  committee  on  appropriations  of  the  House.  This 
is  quite  erroneous.  The  committee  on  appropriations  is  only  one 
of  seven  committees  of  the  house,  each  of  which  performs  a  part 
of  the  function  of  reviewing  estimates  and  preparing  appropriation 
measures  quite  independently  of  the  others;  and  still  another  prepares 
the  revenue  measures  with  little  or  no  regard  for  the  several  com- 
mittees which  review  estimates  and  prepare  appropriation  bills.  Then 
these  bills,  when  introduced,  are  taken  up  in  the  Senate,  where  sev- 
eral more  committees  perform  like  functions.  But  the  whole  initia- 
tive in  the  preparation  of  an  authoritative  finance  measure  for  the 
government  lies  in  these  bipartisan  committees,  which  have  no  re- 
sponsibility for  executing  the  measures  after  they  are  passed.  The 
American  system  is  still  further  compromised  by  the  practice  of  initi- 
ating salary  increases,  appropriating  for  specified  positions,  and  in- 
jecting as  "riders"  measures  of  organic  law,  not  only  depriving  the 
Executive  of  initiative,  but  also  forcing  on  him  an  organization,  a 
personnel  and  conditions  governing  expenditures,  which  destroy  ex- 
ecutiAje  responsibility — a  result  which  has  come  about  largely  by  what 
is  known  as  "log-rolling."  In  the  United  States  there  is  no  budget  J 
or  general  financial  plan. — The  Editor.] 

28s 


THE  BUDGET 


The  Com- 
mittee of 
the  Consti- 
tutional 
Assembly 


Neckcr 


The  Constitutional  Assembly,  at  its  first  session  ^  in  1789, 
instituted  permanent  committees  for  the  purpose  of  studying 
and  directing  all  public  affairs.  Among  its  financial  commit- 
tees were  those  on  finances,  on  taxes,  on  expenditures,  on  pen- 
sions, on  liquidations,  etc.  The  Standing  Orders  of  the  Na- 
tional Assembly,  passed  on  July  29,  1789,  did  not  fix  the 
tenure  or  the  powers  of  these  committees.  The  immediate 
result  of  the  establishing  of  these  permanent  committees  was 
the  restriction,  which  ended  in  a  complete  annulment,  of  the 
powers  of  the  ministers  [the  usurpation  of  the  powers  of  the 
executive].  Necker,  for  instance,  the  first  Minister  of  Fi- 
nance— who  during  his  preceding  terms  as  minister  had  pre- 
pared the  reform  of  direct  taxes,^  very  much  to  his  credit — 
was  not  even  consulted  on  the  subject  of  the  establishing  of 
land,  personal  and  property  taxes.  The  committees  did  his 
work  without  him.  The  fiscal  laws  often  did  not  come  to  his 
knowledge,  except  through  the  promulgation  of  the  vote  upon 
them,  often  accompanied  by  a  circular  giving  notice  that  they 
were  in  operation.  The  correspondence  of  Necker  with  the 
National  Assembly  contained  in  his  CEiiires  completes  shows 
in  every  line  his  isolation  and  his  vexation,  "his  great  anguish 
of  heart  and  mind,"  "his  continuous  torments,"  "the  approach- 
ing exhaustion  of  his  forces,"  "the  dangerous  condition  of  his 
health  which  compelled  him  to  take  the  waters."  His  me- 
moirs close  with  this  very  just  reflection: 

"The  National  Assembly  committed  a  mistake  by  re- 
quiring its  committees  to  give  an  account  of  the  condi- 
tion of  finances.  This  is  a  mission  which  the  National 
Assembly  should  have  left  to  the  chief  of  the  Department 
of  the  Public  Treasury,  reserving  only  to  the  commis- 
sioners appointed  by  the  Assembly  the  right  of  revision 
and  control  of  the  accounts."  (Stir  V administration  de 
M.  Necker,  by  Necker  himself,  1791.) 

The  institution  of  permanent  committees  had  precisely  the 
purpose,  as  Roederer  admitted,  "of  putting  the  finances  be- 
yond the  reach  of  attempts  on  the  part  of  the  executive 
power." 

1  On  June  10,  1789,  one  and  one-half  months  after  the  opening  of 
the  Etats-Generaux  under  decree,  there  were  organized  four  perma- 
nent committees. 

2  See  on  this  subject  the  informations  contained  in  our  book,  Le^ 
finances  de  Vancien  regime  et  de  la  Revolution, 

S86 


LEGISLATIVE  COMMISSIONS  ON  BUDGET 

The  Legislative  Assembly  organized  a  permanent  commit-   Changes 
tee  in  a  still  more  systematic  way.    The  decree  of  October  i8,   Leeisfative 
1 79 1,  created  21  permanent  committees/  with  465  members;   Assembly 
or,  in  other  words,  the  Assembly  ^  was  distributed  in  commit- 
tees on  public  taxes,  on  the  National  Treasury,  on  the  exami- 
nation of  accounts,  on  assi gnats  and  money,  etc.     Each  com- 
mittee, in  order  to  direct  more  exclusively  the  functions  as- 
signed it,  was  in  direct  communication  with  the  administra- 
tive bodies.^ 

Finally,  the  Convention  carried  this  system  to  an  extreme   The  Ex- 
by  organizing  the  famous  committees  of  Public  Welfare  of  [he"con^^ 
twelve  members,  and  of  General  Safety  of  sixteen  members,    vention 
which  committees  absorbed  all  the  governing  powers.    At  the 
same  time  the  Committee  on  Finances  was  reestablished  with 
forty-eight  members;  its  powers  became  so  extensive  that  it 
could,  on  its  own  initiative,  without  referring  the  matter  to 
the  Convention,  decide  on  the  issue  of  almost  7,000,000,000  of 
assignats. 

Thus,  as  stated  above,  the  power  of  the  ministers  vanished 
and  there  were  no  ministers  in  France.  The  ^'chronology  of 
ministers"  leaves  this  period  blank ;  ^  France  remained  for  a 
year  and  a  half  without  ministers.  Nowadays,  although  there 
are  plenty  of  ministers,  we  say  at  times,  in  a  figurative  way, 
that  there  are  no  ministers  at  all.  Under  the  Convention  the 
abuses  committed  by  the  permanent  committes  actually  brought 
about  this  result.  Soon,  however,  the  Constitution  of  the  year 
III  of  the  Republic  abolished  the  permanent  committees,  which 
did  not  reappear  until  in  1848. 

The  Standing  Orders  of  the  Constitutional  Assembly  of  '^^^.  A*' 
1848  divided  the  900  deputies  into  15  permanent  committees,   of"i848 

^  The  committees  were  permanent,  although  their  members  were 
subject  to  reelection  periodically  and  by  series. 

2  "No  one  shall  be  at  the  same  time  a  member  of  two  committees." 
(Article  24,  of  the  decree  of  October  18,  1791.) 

^  The  meetings  of  the  committees  of  the  legislative  assembly  were 
public  in  the  fullest  sense  of  the  word:  "The  work  of  the  committee 
shall  be  public  to  all  the  members  of  the  Assembly."  (Article  29 
of  the   decree  of   October   18,    1791.) 

*  After  J.  Necker,  Lambert,  Tarbe,  Claviere,  the  chronology  of  min- 
isters continues  as  follows  for  the  ministry  of  finances:  June  13, 
1793/Destournelles;  April  I,  1794,  Commission  called  the  Commis- 
sion on  Finances  and  later  the  Commission  on  National  Revenues; 
November  8,  1795,  Faypoult;  February,  1796,  Ramel.  For  more  than 
one  year  and  a  half  the  ministry  of  finance  had  no  incumbent. 

287 


THE  BUDGET 

of  60  members  each,^  "charged,  unless  the  Assembly  should 
decide  differently,  with  examining  the  suggestions  and  peti- 
tions relating  to  their  respective  subjects."  (Standing  Orders 
of  the  Constitutional  Assembly  of  1848,  Article  12.)  In 
May,  1849,  the  Legislative  Assembly  abolished  these  perma- 
nent committees,^  the  failure  of  which  had  resulted  chiefly 
from  the  complexities  of  their  organization.  Certain  commit- 
tees— such  as  the  Committee  on  Agriculture,  Hygiene,  Justice 
and  Commerce — found  among  the  farmers,  doctors,  notaries, 
business  men  and  tradespeople  more  candidates  than  actually 
needed ;  while  the  Committees  on  Foreign  Affairs  and  on  the 
Navy  had  none  other  than  lawyers. 

At  the  present  time  various  suggestions  resulting  from  par- 
liamentary initiative  have  been  made  urging  the  permanency 
of  the  commissions  by  setting  forth  the  necessity  of  increasing 
the  special  competency  of  the  legislative  personnel.  "In  the 
present  organization,"  it  has  been  said,  "there  are  necessarily 
Difficulties  found  two  deplorable  things:  (i)  certain  members  who  are 
^  ^^  appointed  are  little  competent  or  entirely  incompetent;   (2) 

certain  deputies  who  are  well  qualified  cannot  be  appointed." 
H  the  system  of  permanent  committees  were  substituted  for 
the  temporary,  these  weaknesses  would  disappear. 

"In  order  to  become  a  lawyer,  a  candidate  must  have 
three  years  of  law  school  and  another  three  years  of  prac- 
tical training ;  in  order  to  become  a  doctor  one  needs  to 
have  six  years  of  schooling.  In  order  to  become  an  en- 
gineer, even  of  the  poorest  kind,  one  needs  six  years  of 
study.  .  .  .  How  can  it  be  supposed  that  a  deputy  could 
possibly  acquire  in  a  few  meetings  of  a  temporary  com- 
mission any  degree  of  competency  on  a  subject  which  he 
has  never  studied  ?"  ^ 

^  Article  16  of  the  Standing  Orders  of  the  Constitutional  Assembly 
of  1848  read  as  follows:  "Every  member  of  the  Assembly  shall  have 
the  right  to  attend  without  a  consultative  or  deliberative  vote  the 
discussions  of  the  Committees."  In  this  connection,  too,  the  publicity 
of  which  we  have  spoken  coincides  with  the  principle  of  permanency. 

2  It  is  quite  useful  to  read  with  regard  to  the  large  permanent 
committees  of  1848  a  study  published  by  M.  de  la  Berge  in  the  Revue 
dcs  Deux  Mondes  of  December  i,  1889. 

^  Proposition  of  the  resolution  relating  to  the  Standing  Orders  of 
the  Chamber  and  having  for  object  the  establishing  of  six  perma- 
nent commissions^  submitted  by  the  Deputy  de  Jouvencel  (Annex  70, 
November  21,  1885). 

•     288 


LEGISLATIVE  COMMISSIONS  ON  BUDGET 

It  was  due  to  its  permanent  committees  that  the  Revolution 
brought  about  such  immortal  results.  "If  a  similar  work  were 
suggested  to  our  Chambers  as  organized,  their  failure  in  ex- 
ecutive capacities  would  soon  show  the  inferiority  of  their 
means  of  operation."  ^ 

Under  this  pretext  is  hidden  consciously  or  unconsciously 
the  same  motive  revealed  by  historical  precedent,  that  of  re- 
ducing the  ministerial  authority  and  dismembering  the  execu- 
tive power.  M.  Leon  Say  explained  it  to  perfection  in  an 
article  which  has  already  been  cited : 

"The  Commission  on  Budget  wants  to  put  itself  in  the  Conflict 
place  of  the  administration  and  to  prepare  the  budget  5.^*^^^^^" 
itself  instead  of  being  satisfied  with  receiving  it  for  the  tive  and 
purpose  pf  control.     The  president  of  the  Commission  the  Com- 
on  Budget  has  become  to  some  extent  the  First  Lord  of  ™*^^^°" 
the  Treasury  and  he  has  appointed  to  serve  under  him, 
as  in  England,  a  certain  number  of  Secretaries  of  State. 
The  opponents  of  ministerial  power  see  at  once  the  bene- 
fits they  could  derive  from  this  new  institution."     (Jan- 
uary 15,  1885.) 

The  effect  would  be  so  much  more  certain,  since  the  com- 
petency of  the  members  of  permanent  commissions  would 
meet  to  a  larger  extent  the  expectations  of  the  promoters  of 
the  plan  to  reestablish  permanent  committees. 

Here  lies  the  danger  of  the  system.     Barring  this  feature,   The  Weak 
permanency  of  committees  would  present  real  advantages.    If    ^P°* 
this  institution  yields  favorable  results  in  the  United  States, 
it  is  because  an  important  portion  of  the  executive  power  is 
regularly  assigned  to  the  committees  of  Congress,  which,  in 

^  Resolution  having  for  the  object  the  establishing  of  annual  Commis- 
sions, recruited  at  will  and  corresponding  to  the  large  branches  of 
public  services,  presented  by  Deputy  Georges  Graux  (Annex  639, 
March  20,  1882).  This  last  proposition  does  not  tend  to  create 
permanent  committees,  but  only  annual  Commissions.  "We  are  not 
going,  gentlemen,  to  suggest  to  you  the  reestablishing  of  permanent 
committees.  Without  recalling  the  memories  of  excesses  commit- 
ted by  the  Committee  of  Public  Welfare,  it  is  certain,  however,  that 
permanent  Committees  can  cause  a  confusion  of  powers  and  en- 
croachments of  the  Legislative  on  the  Executive  Power."  A  new 
proposition  to  establish  is  large  permanent  Commissions  was  defeated 
on  June  11,  1894.  Another  proposition  was  made  by  M.  Henry  Ma- 
ret,  July  4,  1898. 

289 


Multiplic- 
ity of 
Reports 


THE  BUDGET 

order  to  exercise  their  powers,  no  longer  need  to  encroach 
upon  executive  authority.^ 

Reports  Prepared  by  the  Legislative  Commissions  [or  Com- 
mittees'] :  The  commissions  on  budget — working  behind  open 
or  closed  doors,  permanent  or  not  permanent — -study  the  plan 
of  the  budget  either  directly  in  the  course  of  their  meetings, 
or  by  demanding  from  the  branches  of  the  administration  and 
from  the  ministers  written  opinions,  or,  finally,  by  summon- 
ing the  ministers  and  their  subordinate  service  managers  to 
appear  before  them.  When  these  studies  are  completed,  and, 
when  each  one  of  the  suggested  resolutions  has  in  succession 
been  discussed  and  voted,  the  commission  presents  the  result 
of  its  work  in  a  report,  which  is  followed  by  the  text  of  the 
commission's  bill. 

In  former  times  a  single  report,  the  general  report  on 
budget,  was  sufficient.  Now,  each  ministry  and  each  branch 
of  service  forms  the  subject  of  a  special  report;  its  author 
takes  advantage  of  this  fact  in  order  to  compile  a  volume  and 
often  a  bulky  oUe.^  As  M.  Leon  Say  says:  "The  institu- 
tion of  special  reports  has  greatly  prospered  in  the  Chamber 
of  Deputies.  Eight  reports  were  made  in  1878  in  the  Na- 
tional Assembly;  there  were  twelve  in  1877  in  the  Chamber  of 
Deputies,  fourteen  in  1878,  fifteen  in  1879,  nineteen  in  1883, 
nineteen  in  1884."  Now  there  are  about  twenty-five  or 
thirty.^ 


^  [With  respect  to  this  suggestion,  there  is  this  to  be  said  of  it: 
The  author  begins  with  "If" — as  a  matter  of  fact  the  standing  com- 
mittee system  here  has  produced  very  bad  results ;  the  encroachment 
on  executive  power  has  not  been  by  assignment,  but  by  a  gradual 
process  of  crowding  in.  In  contemplation  of  constitutional  law  as 
originally  conceived.  Congress  has  usurped  the  powers  of  the  execu- 
tive and  to  that  extent  usurped  if  not  destroyed  the  principle  of  "re- 
sponsible government." — The  Editor]. 

2  A  report  relating  to  the  ministry  of  commerce  in  the  budget  for 
1888  constitutes  an  encyclopedia,  which  gives  all  honor  to  its  author, 
M.  Felix  Faure,  and  which  everybody  would  like  to  have  outside  of 
the  annual  collection  of  the  reports  on  budgets.  The  same  is  the  case 
with  the  report  on  Fine  Arts  for  1900  and  a  good  many  others,  where 
the  authors  have  prepared  a  long  historical  and  theoretical  treatise 
whereby  the  chapters  of  the  budget  for  the  fiscal  period  which  has 
to  be  voted  are  treated  only  on  a  few  pages  at  the  end  of  the  treatise. 

^  The  Senate  has  finally  yielded  to  the  temptation  of  the  manifold 
reports;  only  the  reports  of  the  ministry  are  less  extensive  in  the 
Senate  than  in  the  Chamber  of  Deputies. 

290 


LEGISLATIVE  COMMISSIONS  ON  BUDGET 


The  general  report  continues  to  recapitulate  the  totals  of 
revenues  and  of  expenditures. 

This  general  report  is  followed  by  the  text  of  the  fiscal  bill, 
as  drafted  by  the  commission  on  budget.  This  text,  even 
when  it  reproduces  the  provisions  of  the  bill  as  made  by  the 
Government,  becomes  a  new  draft,  which  the  commission  sub- 
mits as  its  own,  excluding  all  other  bills  from  discussion  by 
the  Assembly.  If,  later,  the  Minister  of  Finance  tries  to  re- 
vise certain  articles  of  his  plan,  which  were  killed,  he  can  do 
it  only  by  presenting  them  in  the  form  of  amendments.^ 

The  drafting  of  the  reports  and  the  submitting  of  the  final 
text  of  the  fiscal  bill,  which  the  Chamber  orders  to  be  printed 
and  which  it  distributes  among  its  members,  are  the  two  re- 
sults of  the  work  of  the  commission  on  budget.^ 

The  Discussions  on  the  Fiscal  Laiv:  The  "public  discus- 
sion," which  immediately  precedes  the  vote,  has  two  phases 
indicated  by  the  following  formula:  the  public  discussion  sub- 
mits to  the  deliberation  of  the  assembly  of  the  representatives 
of  the  country,  first,  the  total,  and  then,  the  details  of  the 
fiscal  bill. 

The  public  discussion  is  therefore  divided  into  a  general 
discussion  and  a  discussion  by  article. 

The  "general  discussion"  must,  as  a  rule,  open  the  debates. 
The  "general  discussion" — by  viewing  the  situation  in  its 
totality,  by  treating  the  question  from  the  highest  possible 
point  of  view — must  serve  as  a  guide  and  as  a  regulator  for 
the  "discussion  by  article."  This  rule  was  not  observed  with 
regard  to  the  budget  for  1908  because  of  special  circumstances 
and  in  spite  of  protests  from  several  members  of  the  Assem- 
bly.3 

^  [Under  the  French  system,  first  an  executive  budget  is  submitted, 
then  a  legislative  budget  (the  draft  of  the  budget  commission)  fol- 
lows, which  comes  before  the  lower  house  as  an  authoritative  meas- 
ure. But  each  is  a  definite,  well-rounded,  carefully-considered  finan- 
cial plan.  In  the  United  States  there  is  no  such  plan  proposed  and 
submitted  either  by  the  Executive  or  by  a  committee  of  Congress. — 
The  Editor.] 

2  The  work  of  the  commissions  is  not  completed  when  they  submit 
their  plans.  The  members  of  the  commissions,  and  particularly  those 
members  who  have  to  report  on  the  plans,  must  intervene  in  the 
course  of  the  public  discussion. 

^  A  decision  passed  by  the  Chamber  of  Deputies  on  October  29, 
1907,  stipulated  that  *'the  general  discussion  is  closed  the  moment 
the  discussion  of  the  articles  of  the  fiscal  law  begins,"  that  is,  after 
all  the  chapters  of  the  expenditures  on  schedule  A  have  been  voted. 

291 


The 
Results 


The 
General 
Discussion 
of  the  Bill 


THE  BUDGET 


The  Tenor 
of  the 
Debates 


Topics 
Debated 


The  Speakers  who  take  the  floor  in  the  general  discussion  * 
criticise  or  approve  the  proposed  budget  in  its  main  outlines, 
recapitulate  the  past,  and  try  to  penetrate  the  future — in  a 
word,  outdo  each  other  in  generalizations.  The  "general  dis- 
cussions" of  recent  budgets,  for  instance,  related  specially  to 
the  economies  to  be  effected  and  to  the  reforms  of  taxation  to 
be  achieved.  These  are  the  principal  points  which  engage  the 
public  mind.  All  parties  preach  economy ;  the  party  in  power, 
however,  states  that  if  the  expenditures  are  heavy,  the  blame 
lies  in  "the  tragic  fate  which  weighs  on  Europe  and  drives  all 
nations  to  ruin  themselves  on  armaments."  But,  contrasted 
with  the  barren  expenditures  for  war  purposes,  the  budget 
includes  productive  expenditures,  which  will  benefit  the  coun- 
try by  developing  new  sources  of  wealth.  Finally,  eliminating 
the  two  main  items  of  expenditure,  for  war  purposes  and  for 
public  works,  the  balance  can  be  no  further  redticed/'  ^  This 
apology  is  violently  contradicted  by  some  people,  who,  on  the 
basis  of  figures,  denounce  the  advancing  tide  of  expenditures, 
in  spite  of  promises  and  resolutions  made  on  the  floor  of  the 
Chamber.  According  to  their  opinion,  a  better  administration 
of  public  funds  would,  to  a  large  degree,  reduce  the  budgetary 
figures. 

So  far  as  fiscal  reports  are  concerned,  the  general  discus- 
sion deals  with  them  particularly  when  they  form  the  main 
feature  of  the  budgetary  combinations  of  the  Government. 
Plans  for  abolishing  duties  on  wine,  licensing  of  distilleries, 
imposing  of  taxes  on  income,  changing  of  the  inheritance  tax, 
increasing  of  large  fiscal  monopolies,  etc.,  were  for  several 
years  the  main  topics  of  general  discussion.  For  instance, 
with  regard  to  the  budget  for  1908,  proposed  taxes  on  mov- 

The  objections  raised  to  the  method  of  procedure  have  anticipated 
that  the  general  discussion  finding  itself  no  longer  in  its  place  must 
,  necessarily  be  shortened.  This  discussion  lasted  but  a  single  day, 
taking  up  two  sessions,  the  morning  and  the  evening  session  of 
December  6,  1907.  Fortunately  the  quality  of  the  speakers  such  as 
MM.  Ribot  and  Jules  Roche,  to  whom  M.  Caillaux  responded,  made 
up  for  the  brevity  of  the  discussions. 

^  The  president  announces  in  the  following  terms  the  opening  in 
the  general  discussion  on  budget:  "The  order  of  the  day  calls  for 
the  discussion  of  the  bill  relating  to  the  budget  for  the  fiscal  period. 
.  .  .  The  general  discussion  is  opened." 

2  As  soon  as  the  expenditures  are  elastic  and  the  statistics  have 
proved  to  what  extent  they  were  extended,  it  should  be  possible  by 
an  inverted  procedure  to  reduce  them  more  or  less:  logic  condemns 
the  barbarian  and  absolute  term  "incompressibility." 

292 


Speakers 


LEGISLATIVE  COMMISSIONS  ON  BUDGET 

able  property,  a  stamp  tax  on  checks,  bills  of  exchange,  etc., 
and  a  new  system  of  personal  estimating  of  real  estate  reve- 
nues from  undeveloped  property — forerunners,  it  seems,  of    • 
the  income  tax — i\vere  hotly  attacked  and  defended  in  turn. 

For  1 91 2  the  continuous  increase  of  expenditures,  exceed- 
ing 3,500,000,000  in  three  years,  became  the  main  subject  of 
recriminations.  Only  one  session  (meeting),  however,  dur- 
ing which  seven  speakers  took  the  floor  was  devoted  to  the 
general  discussion,  in  order  to  gain  time. 

Three  classes  of  speakers  must  always  be  distinguished  in  Three 
these  budgetary  tournaments.  First,  the  speaker  of  the  Oppo-  ^^^^t^^^^  °^ 
sition,  attacking  mercilessly  the  entire  financial  policy,  declar- 
ing that  the  country  is  headed  straight  for  ruin,  that  the  public 
funds  are  wasted;  he  may  take,  however,  another  tack  and 
assert  that  the  country  is  suflfering  from  a  fatal  inertia,  that 
the  cart  is  getting  stuck,  that  the  large  social  reforms  should 
be  approached  frankly  at  any  cost,  etc. — the  tenor  of  his  re- 
marks depending  on  whether  he  is  a  member  of  the  extreme 
Right  or  the  extreme  Left.  Then  comes  the  moderate  speaker, 
who  is,  in  fact,  a  partisan  of  the  governmental  system  and  a 
defender  of  the  laws,  but  under  this  cover  he  is  quite  lil^eral 
in  his  warnings,  always  ready  to  attack  the  positions  of  his 
predecessors  and  thus  to  earn  the  applause  of  the  center  party, 
l^^inally,  the  official  speaker,  the  minister,  the  commissioner  of 
the  Government  or  the  deputy  in  charge  of  the  general  report 
takes  the  floor. 

In  all  cases  those  minds  dealing  in  generalities  speak  during 
the  general  discussion,  while  the  defenders  of  particular  in- 
terests, the  deputies  who  try  to  get  subsidies  for  their  con- 
stituencies, reserve  their  activities  for  the  discussion  by  article. 
Violent  and  abusive  language  prevails ;  pettiness  and  incapacity 
are  pointed  out  again  and  again.  There  is  no  doubt  that  very 
often  corrupt  politics  inspire  these  attacks,  but  these  temporary 
incidents  are  obliterated  by  the  impression  made  by  beautiful 
speeches  which  live  in  the  memory  and  which  are  delivered 
before  the  Chaml>er  and  the  Senate.  Unfortunately,  at  pres- 
ent, in  order  to  gain  time,  things  are  cut  short  which  should 
not  be  hurried. 

As  soon  as  the  list  of  speakers  requesting  the  privilege  of 
the  floor  is  exhausted,  or  when  the  Chaml>er  manifests  a  de- 
sire to  finish  the  discussion,  the  president  announces  the  clos- 
ing of  the  general  discussion  by  saying:  *'I  submit  to  vote 
the  question  6f  closing  the  general  discussion  .  .  .  the  dis- 

293 


THE  BUDGET 

cussion  is  closed."     Then  follows  the  "discussion  by  article." 

The     ^  The  discussion  by  article  of  the  fiscal  law,  as  well  as  any 

Disoission       other  law,  treats  successively  each  article  of  which  the  law  is 

^     ^  *  ^       composed.     We  have  to  deal  in  this  connection  with  ''articles 

of  the  law" ;  we  emphasize  this  in  order  to  avoid  any  possible 

confusion  with  the  "articles"    which    form    subdivisions    of 

chapters,  which  will  come  up  later. 

The  president  reads,  or  causes  to  be  read,  in  rotation,  all 
the  articles  of  the  fiscal  law.  In  case  one  of  these  refers  to 
an  annexed  schedule,  the  latter  is  discussed.^  Thus,  the  presi- 
dent comments  on  article  I,  referring  to  schedule  A  annexed 
to  this  law — "Before  submitting  article  I  for  discussion,  I 
beg  to  call  the  attention  of  the  Chamber  to  the  fact  that  it 
has  to  vote  schedule  A." 

Both  the  discussion  and  the  vote  are  concentrated  on  this 
annexed  schedule,  which  shows  the  details  of  expenditures  of 
the  diflferent  ministries  arranged  by  chapter,  including  about 
a  thousand  figures  and  items,  occupy  the  sessions  for  several 
months. 

Then,  returning  to  the  total  of  article  I,  the  Chamber  votes 
on  this  article  and  passes  to  the  following  articles  with  the 
same  formalities. 

From  the  point  of  view  of  "specialization"  of  expenditures 
this  series  of  partial  votes  raises  grave  questions  of  a  consti- 
tutional nature,  which  will  be  discussed  later. 

^  Only  for  the  expenditures.  Because  with  regard  to  revenues 
where  there  is  no  question  of  specialization,  the  vote  on  the  annexed 
schedules  is  taken  in  lump  with  regard  to  the  article  referring  to 
these  annexed  schedules. 


294 


CHAPTER  XIII 

SPECIALIZATION     [SPECIAL    FUNDING    OF    DIF- 
FERENT ACTIVITIES]  THE  RESULT  OF 
VOTING  BY  CHAPTER 

Voting  by  Chapter;  Tejidency  Toward  Specialization;  The  Acts  of 
the  Constitutional  Assembly;  The  Principles  of  Specifications;  Too 
Much  Latitude ;  Specifications  Limited  to  Sections ;  Voting  by 
Chapter  Inaugurated  in  1831;  Reactionary  Legislation;  Definition 
of  the  Chapter. 

Definitions  of  the  Chapter:  What  is  a  Chapter?  Chapters  Are 
Variable;  Number  Increased,  Importance  Diminished;  Struggle 
Over  the  Chapter;  Arguments  Against  Subdividing  the  Chapter; 
Shall  the  Chambers  Administer  the  Finances?  The  Legislature 
All  Powerful. 

The  Final  Voting  on  the  Budget:    Parliamentary  Routine. 

We  have  seen  that  the  tables  attached  to  Article  I  of  the  Voting  by 
budget  law  set  forth  in  detail  with  figures  and  legends  the  ^^*P*^*^ 
total  of  ministerial  expenditures.  Each  figure,  with  its  leg- 
end, constitutes  a  budgetary  chapter,  which  is  successively 
submitted  to  discussion  and  to  a  special  vote.  In  the  majority 
of  cases,  the  discussion  is  short,  or  there  may  be  none  at  all, 
the  ballot  being  taken  immediately  by  "rising  vote."  How- 
ever, the  formality  shows  what  is  called  the  specification  by 
chapter,  which  means  that  each  chapter,  sanctioned  by  special 
vote,  becomes  an  entity  ^  provided  with  a  distinct  appropria- 
tion, the  limits  of  which  the  executive  power  must  strictly 
respect.  \ 

The  precedents  and  the  importance  of  this  specification  by 
chapter  deserve  to  be  dwelt  upon. 

These  "specifications"  of  the  vote  on  public  expenditures 
could  apply  to  one  or  the  other  of  the  following  budgetary 
subdivisions :  expenditures  en  bloc,  expenditures  by  ministry 
[each  department],  by  section  of  the  ministry  [organic  divi- 

^ [Contrast  this  with  the  British  practice  of  voting  on  each  item 
(or  "vote")  separately  in  committee  of  the  whole  before  the  appro- 
priation bill  is  introduced,  which  avoids  all  the  difficulties  which  the 
author  points  out  in  the  French  system. — The  Editor.] 

295 


THE  BUDGET 


Tendency 
Toward 
Specializa- 
tion 


The  Acts 
of  the  Con- 
stitutional 
Assembly 


sion  of  a  department],  by  ministerial  chapter  [groups  of 
items],  by  article  or  by  paragraph  [item  of  appropriation]. 
We  see  from  this  how  the  limitations  gradually  draw  closer, 
and  how  the  legislature  ties  the  hands  of  the  executive  more 
and  more. 

These  are  precisely  the  steps  by  which  financial  history, 
from  the  beginning  of  the  century,  has  gradually  developed 
Budgetary  specification  has  developed  from  a  vote  en  bloc  by 
ministry  to  a  vote  by  section  of  a  ministry;  finally,  it  has 
come  to  a  vote  by  chapter,  where  it  now  stands,  showing  the 
tendency  to  descend  as  far  down  as  to  the  vote  by  paragraph 
and  by  article  in  accordance  with  [legislative]  suggestion. 

Under  the  Constitutional  Assembly,  expenditures  were 
shown  in  two  or  three  totals,  that  is,  almost  en  bloc.  Thus, 
the  law  of  February  i8,  1791 :  "There  shall  be  provided  in 
the  Public  Treasury  the  following  funds  in  1791 :  (i)  An 
amount  of  282,700,000  livres;  .  .  .  (2)  The  sum  of  300,- 
000,000  livres;  .  .  .  these  two  total  582,700,000  livres." 
This  law  of  February  18  is  the  only  law  which  anticipated 
expenditures  for  an  entire  year.  If  the  Constitutional '  As- 
sembly thus  ignored  the  rules  of  specification,  its  fault  lay  in 
its  ignorance.  Having  inherited  no  rule  or  tradition  in  budg- 
etary matters  from  the  old  regime,  the  Constitutional  As- 
sembly had  no  time  to  build  up  anything  for  itself.  Other- 
wise, its  natural  instinct  would  have  led  it  spontaneously  to 
a  restriction  of  the  powers  of  the  executive  by  means  of  a 
specification  of  votes. 

The  assemblies  of  the  Consulate  and  of  the  Empire  also 
voted  the  expenditures  en  bloc,^  or  nearly  so. 

1  The  first  budget  of  the  Consulate,  fixed  by  the  law  of  19th  Nivose 
of  the  year  IX  of  the  Republic,  had  the  following  legend :  "Article 
I.  The  amount  of  415,000,000  is  put  at  the  disposal  of  the  Govern- 
ment for  the  expenditures  of  the  various  ministries  during  the  year 
IX."    See  our  work:  Les  Finances  du  Consulat,  igc2. 

Under  the  Empire,  while  the  same  system  prevailed,  the  law  of 
September  15,  1807,  read  as  follows:  "Article  15.  The  amount  of 
600,000,000  is  put  at  the  disposal  of  the  Government  on  account  of 
the  expenditures  for  the  year  1808."  This  lump  sum  of  600,000,000 
constituted  thus  the  only  official  budget  for  1808.  On  November  25, 
1808,  toward  the  end  of  the  year,  the  following  new  law  was  passed: 
"Article  3.  The  amount  of  130,000,000,  making  with  the  600,000,000 
mentioned  in  Article  15  of  the  law  of  September  15,  1807,  the  total 
sum  of  730,000,000,  is  put  at  the  disposal  of  the  Government."  Then 
Article  5  continues  as  follows:  "This  amount  shall  be  used  first 
for  the  payment  of  the  public  debt  and  then  for  meeting  general  ex-' 

296 


RESULT  OF  VOTING  BY  CHAPTER 

At  the  beginning  of  the  Restoration,  as  may  be  remembered, 
theorists  proposed  to  restrict  still  further  the  budgetary  power 
of  the  representatives,  by  limiting  it  to  a  vote  on  revenues, 
leaving  the  Government  with  the  power  to  allot  the  entire 
amount  of  voted  subsidies  at  its  discretion.^ 

However,  the  real  principles  of  budgetary  law  could  not   The 
fail  to  establish  themselves.     The  law  of  March  25,   1817,    ^/'sped" 
inaugurated  the  specification  of  expenditures  by  ministry  in   ficntion 
its  Article  151 :    'The  expenditure  shall  not  exceed  the  aggre- 
gate appropriation  made  for  each  of  them  (meaning  the  min- 
isters).     They   shall   not   expend   beyond  this  appropriation 
and  shall  be  held  responsible  for  doing  so."     Each  ministry 
has  since  been  the  subject  of  a  separate  group  of  appropria- 
tions beyond  which  the  executive  power  could  not  go.     The 
deficits  in  one  group  could  not  be  offset  by  the  surplus  in  an- 
other, or  vice  versa.     In  a  word,  following  the  text  of  the 
law,  the  ministers  could  not  expencj  beyond  the  limits  of  their 
several  appropriations. 

This  innovation  has  unquestionably  brought  about  consid-  Too  Much 
erable  progress,  by  establishing  the  principle  of  specification.  Latitude 
This  principle,  however,  though  extended  to  an  entire  minis- 
try, left  too  much  latitude  to  the  Executive,  because  the  minis- 
ters, once  the  fiscal  law  had  been  voted,  were  free  to  move  at 
will  within  the  limits  of  the  appropriations,  ranging  l^etween 
100,  120  and  190,000,000.  The  Liberal  Party,  therefore,  has 
not  ceased  to  protest  against  the  laxness  of  the  system,  which, 
according  to  their  opinion,  was  liable  to  produce  the  gravest 
kind  of  abuses.  The  proofs,  which  they  furnished  for  their 
contentions,  were  exaggerated,  but  still  fairly  typical.  For 
instance,  in  the  ministry  of  the  interior,  there  were,  along- 
side of  each  other,  appropriations  for  theaters  and  for  the 
clergy;  it  was  therefore  to  be   feared  that  the   Executive, 

penditures  of  the  service  as  follows."  (A  table  shows  then  21  items 
of  expenditures  together  with  their  figures.)  From  the  beginning  of 
the  year  until  November  25,  that  means  that  during  almost  eleven 
months  out  of  twelve  the  Imperial  Government  has  maintained  itself 
on  this  lump  sum  of  600,000,000  appropriated  by  the  law  of  Septem- 
ber 15,  1807.  Only  for  the  last  month  of  the  year  there  appears  a 
summary  distribution  constituting  an  indication  rather  and  not  any 
longer  a  limitation. 

The  same  law  of  November  25,  1808,  provided  in  turn  for  the  year 
1809  as  follows:  "Article  10.  The  sum  of  600,000,000  is  put  at 
the  disposal  of  the  Government  on  account  of  the  expenditures  of 
1809." 

^  See  Chapter  II. 

297 


THE  BUDGET 

through  an  arbitrary  diversion  ^  of  funds,  might  secretly  en- 
rich the  clergy  by  spoliation  of  the  theaters.     How  the  times 
do  change! 
Specifi-  In  1827,2  de  Villele  limited  the  specifications  to  the  sections 

Umited  to      ^^  ^^^^  ministry.     The  preface  to  his  ordinance  of  Septem- 
Sections  ber  I,  1827,^  read: 

"In  order  to  determine  with  precision  the  special  ap- 
propriations within  which  our  ministers  shall  henceforth 
utter  their  orders  for  payments,  special  sections  shall 
be  established  in  the  budget,  which  shall  limit  the  expen- 
ditures of  each  branch  of  the  service  (work).  .  .  ."  The 
text  of  the  ordinance  read  as  follows:  "Article  i.  Be- 
ginning with  the  fiscal  period  of  1829,  the  plan  of  the 
General  State  Budget  shall  present  direct  the  estimates 
of  expenditures  by  the  main  branches  of  the  sendees 
(works),  in  conformity  with  the  attached  table  which 
shall  be  drafted  each  year  and  submitted  for  approval 
by  the  ministers/' 

In  consequence  thereof,  the  vote  of  the  budget  for  1829 
applied  not  only  to  seven  ministries  but  to  fifty-two  budgetary 
subdivisions;  thus  the  reform  had  a  certain  value.  Its  fault, 
however,  lay  in  the  origin,  because  this  reform  emanated  from 
a  simple  ordinance,  the  right  to  revise  which  the  executive 
branch  reserved  for  itself.  Furthermore,  the  sections  formed 
subdivisions  of  considerable  extent,  some  of  them  carrying 
amounts  varying  from  25  to  169,000,000  (pay  and  mainte- 
nance of  the  Army,  for  example). 

^  In  fact,  however,  although  no  sanction  has  attributed  a  limiting 
effect  to  the  votes  passed  by  the  Chamber  on  the  chapters,  paragraphs 
and  articles,  we  have  seen  that  the  Government  of  the  Restoration 
submitted  to  them.  This,  however,  was  only  done  by  condescension. 
See  on  this  subject  the  discussion  relating  to  an  amendment  by  Ben- 
jamin Constant,  which  was  rejected. 

2  Since  1820  the  commission  on  the  budget  of  expenditures  has 
taken  the  initiative  by  making  the  suggestion  tending  to  substitute 
the  voting  by  chapter  to  the  voting  by  ministry.  This  plan  has 
caused  a  very  sharp  controversy;  it  was  opposed  by  M.  de  Villele, 
Deputy,  and  M.  Roy,  Minister  of  Finance;  action  was  postponed  by 
the  Chamber  in  spite  of  the  efforts  of  Benjamin  Constant  and  of 
General  Foy. 

3  The  ordinance  of  September  i,  1827,  is  the  last  of  financial  ordi- 
nances issued  through  the  initiative  of  M.  de  Villele. 

298 


RESULT  OF  VOTING  BY  CHAPTER 

The  Revolution  of  1830  brought  a  decisive  step.     Voting   Voting  by 
by  chapter  was  introduced  by  the  law  of  January  29,  1831,   i^fau^urated 
which  read  as  follows:  in  1831 

"Article  11.  The  budget  of  expenditures  of  each  min- 
istry shall  henceforth  be  divided  into  special  chapters; 
each  chapter  shall  contain  only  subjects  and  works  which 
are  correlated  or  of  the  same  nature.  .  .  .  Article  12. 
The  amounts  allotted  by  law  to  each  of  these  chapters 
cannot  be  applied  to  other  chapters." 


Thus  the  voting  by  chapter  was  established  in  France*.  As 
this  system  of  voting  is  still  in  use,  our  historical  outline 
would  therefore  come  to  an  end  with  1831,  if  it  were  not  for 
the  fact  that,  under  the  Second  Empire,  the  whole  ground 
was  again  gone  over.  "Specification"  by  chapter,  established 
by  the  law  of  January  29,  183 1,  survived  until  the  end  of  the 
July  Monarchy  and  passed  unscathed  through  the  period  of 
1848.  In  1852,  however,  there  was  a  return  to  the  vote  by 
ministry  (Constitution  of  December  25,  1852).^  In  1861,  the 
vote  by  ministry  was  succeeded  by  the  vote  by  section.  {Sen- 
atus-Consulte  of  December  31,  1861.^)  Finally,  the  vote 
by  chapter  was  reestablished  in  1869.  (Senatus-Consulte 
of  September  8,  1869.^) 

After  the  downfall  of  the  Empire,  the  law  of  September 
29,  1 871 — confirming  the  provisions  of  the  Senatus-Consulte 
oif  September  8,  1869 — stipulated:  "Article  13.  The  budget 
shall  be  voted  by  chapter." 


Reactionary 
Legislation 


^  The  Senatus-Consulte  of  December  25,  1852,  which  interpreted 
and  changed  the  Constitution  of  January  15,  1852,  expressed  itself 
as  follows:  "Article  12.  The  budget  of  expenditures  is  submitted 
to  the  legislative  body  with  its  administrative  subdivisions  by  chapter 
and  by  article.     It  is  voted  by  ministry." 

2  The  Senatus-Consulte  of  December  31,  1861,  which  changed  the 
Articles  4  and  12  of  the  Senatus-Consulte  of  December  25,  1852, 
reads:  "Article  i.  The  budget  of  each  ministry  is  voted  by  section 
in  accordance  with  the  list  attached  to  the  present  Senatus-Con- 
sulte." 

^  The  Senatus-Consulte  of  September  8,  1869,  which  changed 
various  articles  of  the  Constitution,  as  well  as  Articles  3  and  5  of 
the  Senatus-Consulte  of  December  25,  1852,  and  Article  i  of  the 
Senatus-Consulte  of  December  31,  1861,  reads:  "Article  9.  The 
budget  of  each  ministry  is  voted  by  chapter  in  conformity  with  the 
list  attached  to  the  present  Senatus-Consulte," 


299 


THE  BUDGET 


Definition  of  the  Chapter 

First  of  all,  what  is  a  chapter?  For  a  long  while  this  word 
has  been  used  without  a  definition.  We  have  only  stated  that, 
on  the  downward  scale  of  budgetary  subdivisions,  the  chapter 
occupied  one  of  the  lowest  places,  only  the  subdivisions  of 
paragraph  and  article  being  found  below  it. 
What  is  a  The  decree  of  May  31,  1862,  declared:    ''Article  56.  Each 

Chapter?  chapter  shall  contain  only  correlated  divisions  of  a  particular 
service  (work),  or  divisions  of  the  same  nature."^  Can 
any  definition  be  deduced  from  this  text?  Is  it  enough  to 
declare  that  a  chapter  is  a  portion  of  the  budget  containing 
correlated  divisions  of  a  particular  service,  work  of  the  same 
nature?  Evidently  not;  because  a  section,  a  ministry,  con- 
tain only  correlated  divisions  of  the  service — work  of  the 
same  nature.  And  if,  instead  of  going  upwards  to  a  section 
or  to  a  ministry,  we  descend  below  the  chapter  to  the  article 
and  to  the  paragraph,  the  division  of  service  (work)  (becom- 
ing still  more  limited)  possesses  to  a  much  larger  extent  the 
quality  of  being  correlated  or  of  the  same  nature.  As  a 
consequence,  this  formula  would  apply  without  distinction  to 
subjects  which  it  precisely  tries  to  distinguish  from  each 
other. 

Before  embarking  on  a  search  for  another  definition,  it  is 
well  to  admit  that  the  word  "chapter'*  cannot  be  defined  in  a 
precise  way.  Chapter  in  fact  represents  a  conventional  entity 
(personalite),  variable  and  uncertain,  which  the  public  pow- 
ers can  at  will  enlarge  or  restrict :  the  numl^er  and  the  im- 
chapters  portance  of  chapters  have  constantly  varied  to  meet  the  whim 
are  Vari-  of  those  who  prepare  the  budget.  Speaking  of  the  specifica- 
tion of  budgetary  subdivisions,  Royer-Collard  said :  "It  is 
immaterial  whether  they  call  them  chapters  or  some  other 
name."  (April  18,  1822.)  In  the  same  way  the  deputy  re- 
porting on  the  bill,  which  became  the  law  of  January  29,  1831, 
wrote  as  follows:  "The  principle  of  classification,  once 
adopted,  it  is  immaterial  what  name  shall  be  given  the  divi- 
sions." (Report  of  November  5,  1830.)  The  chapter,  there- 
fore, does  not  define  itself;  it  has  no  character  of  its  own; 
it  exists  only  as  a  link  in  the  chain  of  budgetary  subdivisions. 
The  chapter  is  below  the  section  and  above  the  paragraph  and 

^  This  article  of  the  decree  of  May  31,  1862,  is  taken  from  Article 
II  of  the  law  of  January  29,  1831,  which  has  been  cited  above. 

300 


able 


RESULT  OF  VOTING  BY  CHAPTER 

the  article;  it  can  be  personified  only  with  regard  to  its  rela- 
tion with  its  two  neighbors.  In  order  to  define  the  chapter, 
we  have  only  to  specify  its  relative  position:  "The  chapter 
is  a  budgetary  subdivision,  broader  than  the  paragraph  and 
the  article;  it  contains,  within  each  ministry  or  ministerial 
section,  the  divisions  of  the  service  which  are  correlated  or  of 
the  same  nature." 

The  number  of  chapters  has  increased  greatly  since  1831,    Number 
and  as  a  result  thereof  their  average  importance  has  dimin-    imponance 
ished  considerably,  in  spite  of  the  growth  of  the  budgets.     In    Diminished 
183 1,  at  the  beginning  of  the  specification  plan,  there  were 
only  164  chapters.     There  were  338  in  1847;  362  in  1852; 
388  in  1877;  for  1882  it  contained  482.     In  the  budget  plan 
for  1884^  the  Government  created  156  new  chapters;  their 
number  was  thus  increased  to  637  in  the  ordinary  budget. 
The  budget  for  1906,  with  its  annexed  budgets,  contained  984 
chapters,^  and  the  budget  for  191 3  almost  1,000.    There  are, 
therefore,  nowadays,  six  times  as  many  chapters  as  there  were 
in  1831. 

Their  average  individual  weight  in  1831,  when  the  budget 
did  not  exceed  1,000,000,000,  was  about  6,100,000  francs. 
Nowadays,  although  the  budget  amounts  to  4,664,000,000, 
the  average  individual  amount  of  a  chapter  is  about  4,700,- 


^  "The  chapters  are  not  always  established  in  conformity  with  the 
rules  outlined  by  Article  11  of  the  law  of  January  29,  1831,  by  terms 
of  which  every  chapter  should  contain  only  those  branches  of  service 
which  are  correlating  or  of  the  same  nature.  In  fact  in  certain 
ministerial  departments  they  at  times  confuse  the  expenditures  for 
personnel  with  the  expenditures  for  material,  and  even  among  the 
expenditures  for  material  there  are  often  found  entries  which  do  not 
have  the  similarity  which  is  demanded  by  the  law.  The  only  real 
practical  purpose  is  to  follow  the  specification  by  the  nature  of  ex- 
penditures. The  increase  in  the  number  of  chapters  and  their  better 
defined  specifications  will  undoubtedly  enclose  within  more  narrow 
limits  the  power  which  the  ministers  have  to  move  within  one  and 
the  same  chapter."  (Budget  plan  for  the  fiscal  period  1884.  State- 
ment of  supporting  arguments  of  the  Minister  of  Finance,  March  3, 
1883.) 

2  The  total  number  of  chapters  of  the  budget  plan  for  the  fiscal 
period  1906  is  distributed  as  follows: 

General  budget.  Schedule  A 898  chapters 

Annexed  budgets   86  " . 

Total    984  chapters 

3  The  average  figures  have  in  this  connection  as  always  a  very 

301 


THE  BUDGET 


Struggle 
Over  the 
Chapter 


The  Executive  in  1883  undertook  to  increase  the  number 
of  chapters  to  meet  the  attack  of  the  more  radical  exponents 
of  parHamentary  initiative.  These  attacks  urged  a  positive 
control  by  the  legislature  on  all  expenditures,  regardless  of 
amount.  .  It  was  therefore  necessary  to  give  to  the  legislature 
the  opportunity  to  exercise  this  control,  over  even  the  most 
insignificant  items,  in  case  these  attracted  its  attention.  The 
vvreapon  of  the  vote  of  the  legislature  must  be  able  to  strike 
when  it  is  deemed  proper;  otherwise,  the  Government  could 
abuse  the  much  too  large  latitude  allowed  under  the  vote  by 
chapter,  as  has  been  seen :  ^ 


"It  is  necessary  to  give  up  this  illegal  procedure,  which 
has  been  left  us  by  the  monarchy  and  which,  if  perpetu- 
ated, would  have  been  liable  to  render  void  the  action  of 
the  legislature  with  regard  to  appropriations,  to  jeopardize 
the  administration  of  finances  and  to  discredit  the  legis- 
lature itself,  a  situation  to  which  we  could  by  no  means 
be  indifferent."  (Bill  relating  to  the  method  of  voting 
the  budget,  December  23,  1882.) 


incomplete  significance.  Certain  chapters  reach  the  total  of  655,000,- 
000,  while  others  do  not  exceed  1,000  francs.  The  average  figures 
have  no  basis  at  all  in  this  immense  stretch  between  1,000  francs  and 
655,000,000. 

^  Thus  in  the  report  on  the  fiscal  period  1 876,  submitted  by  the 
Cour  des  Competes  to  the  President  of  the  French  Republic,  is  to  be 
found  the  history  of  an  appropriation  of  1,284,815.15  francs  allotted 
to  the  Government  to  meet  the  expenditures  of  transporting  Spanish 
refugees,  whereby  the  reservation  is  made,  which  was  expressly 
formulated  in  the  course  of  the  discussion,  that  no  train  de  luxe 
shall  be  put  at  the  disposal  of  the  most  prominent  of  these  refugees, 
the  Pretender  Don  Carlos.  (Session  of  December  8,  1876.)  Still 
the  accounts  of  the  Central  Disbursing  Cashier  relating  to  the  fiscal 
period  of  1876  contain  a  voucher  for  a  disbursement  of  6,654.90 
francs  to  railroad  companies  for  a  special  train  intended  to  convey 
Don  Carlos;  this  expenditure  was  charged  against  the  aforesaid 
appropriation. 

The  Government  claimed  to  have  acted  within  the  limits  of  its 
instructions,  because  the  appropriation  of  the  chapter  was  not  ex- 
ceeded; only  a  specified  vote  by  article  or  by  paragraph  could  have 
tied  the  Government  more  closely.  The  Cour  des  Comptes,  how- 
ever, wisely  observed  as  follows:  "It  deemed  it  necessary  to  point 
out  the  irregularity  because  its  mission  is  to  inform  the  Legislature 
every  time  the  latter's  intentions  are  not  respected."  These  facts 
became  the  subject  of  a  discussion  in  the  Chamber  of  Deputies  and 
of  a  vote  involving  the  responsibility  of  the  Minister,  March  25,  1889. 


302 


RESULT  OF  VOTING  BY  CHAPTER 


The  conclusion  was  that  the  voting  should  go  as  far  as  the 
paragraph  and  the  article. 

There  are  many  objections  to  these  arguments:  first,  the' 
legislature  would  lose  an  excessive  amount  of  time,  if  it  tried 
to  vote,  one  by  one,  the  two  or  three  thousand  paragraphs  of 
the  budget  of  expenditures.  Furthermore,  the  action  of  the 
Government  would  be  hampered  at  every  step  by  the  too  nar- 
row limits  of  the  vote  by  article;  it  would  be  necessary  con- 
stantly to  ask  the  legislature  for  supplements,  covering  this 
or  that,  the  allotment  for  which  had  been  insufficient.  This 
would  involve  heavy  costs,  because,  in  case  of  appropriations 
too  far  subdivided,  each  allotment  is  expended  in  totality 
without  prejudice  to  the  supplements,  which  are  demanded 
for  those  insufficiently  endowed;  when  the  subdivisions  are 
more  extensive  the  administrations,  strictly  speaking,  may 
balance  their  deficits  with  their  surpluses.  Thiers  said  in 
1830:  "Too  many  divisions  lead  to  too  many  expenditures, 
because  of  the  natural  disposition  of  the  disbursers  to  exhaust 
their  appropriations." 

Furthermore,  a  good  many  people  would  like  to  let  the 
Chambers  administer  the  finances.  The  legislature,  as  we 
have  mentioned  time  and  time  again,  possesses  incontestably 
the  right  to  vote  the  public  revenues  and  expenditures.  But 
if  this  right,  through  a  fatal  logic,  should  be  carried  to  its 
extreme  limit,  it  would  not  be  possible  for  the  vote  to  stop  at 
the  article,  because  the  article  is  subdivided  into  paragraphs; 
neither  should  the  vote  stop  at  the  paragraph,  for  the  para- 
graph is  subdivided  into  items  of  partial  expenditures  upon 
which  the  attention  of  the  legislature  might  also  fix  itself: 
thus  the  vote  would  go  as  far  as  the  items  under  the  partial 
expenditures  proper,  that  is,  as  far  as  the  vouchers  and  orders 
for  payment;  this  would  be  the  extreme  limit.  The  Cham- 
bers, as  a  result,  would  be  compelled  to  turn  executives  in 
order  perfectly  to  control  the  administrations.  The  rule  must 
be  applied  in  a  wise  measure.^  The  fact  of  demanding  from 
the  deputies  a  thousand  partial  votes  and  of  tying  the  execu- 
tive power  down  by  a  thousand  impassable  limits,  seems  suf- 
ficiently to  guarantee  parliamentary  control.     To  go  beyond 


Arguments 
Against 
Subdivid- 
ing the 
Chapter 


Shall  the 
Chambers 
Adminis- 
ter the 
Finances? 


^  In  the  English  budget  the  number  of  "votes"  or  chapters  to  which 
the  budgetary  specification  applies  is  about  250.  The  civil  services 
include  150  votes  at  the  maximum.  The  surplus  of  about  100  votes 
makes  up  the  Estimates  for  the  Army  and  for  the  Navy. 


303 


THE  BUDGET 


The  Leg- 
islature 
All-Power- 
ful 


that  would  clearly  mean  to  exceed  the  proper  boundaries.^ 
This  is  so  much  more  true,  because  it  cannot  be  said  that 
the  ministers  have  power  to  upset  the  contents  of  the  chap- 
ters at  will  without  the  authorization  of  the  legislature.  Thus 
recently,  with  regard  to  the  establishing  of  new  classes  of 
professors  at  municipal  colleges,  the  Minister  of  Public  In- 
struction, anxious  to  rank  them  with  the  professors  of  acad- 
emies (lycees),  lost  no  time  in  submitting  the  matter  to  the 
legislature,  although  all  that  was  necessary  was  to  change  the 
contents  of  chapter  43  of  the  budget  of  the  ministry  of  public 
instruction,  by  means  of  shifting  the  articles,  without  de- 
manding a  supplement  for  the  total  of  the  chapters.  But  the 
reform  in  question  was  too  important  to  be  carried  out  under 
cover.^  In  the  same  way,  in  former  times,  the  question  of  the 
censorship  of  plays  was  submitted  to  the  Chamber  of  Depu- 
ties, where  it  caused  long  discussions,  although  the  censorship 
service,  as  was  pointed  out,  formed  but  an  insignificant  item  in 
chapter  3  of  the  ministry  of  fine  arts.  Strictly  speaking, 
the  Executive  might  have  diverted  the  19,700  francs  of  sal- 
aries paid  to  inspectors  of  theaters,  which  sum  was  included 
in  the  total  of  84,700  francs  of  chapter  3 ;  ^  but  nothing  seems 
to  be  possible  without  a  decision  of  the  legislature. 


The  Final  Voting  on  the  Budget 


Parlia- 
mentary 
Routine 


After  the  chapters  of  expenditures  in  annexed  schedule  A 
are  voted  in  succession,  the  total  of  the  first  article  is  sub- 
mitted to  the  deputies.  The  discussion  then  passes  to  Article 
2,  and  continues  as  before/  from  one  article  to  another  until 


^  Without  greatly  increasing  the  number  of  chapters  it  would  be 
very  useful,  however,  to  classify  them  in  a  more  rational  way  and  to 
subdivide  some  of  them  on  account  of  overcrowding. 

2  See  on  this  subject,  the  question  proper  of  voting  by  chapter,  the 
very  instructive  remarks  of  M.  Buffet  at  the  session  of  the  Senate  on 
December  26,  1895. 

3  So  much  more,  as  the  censorship  being  established  by  decree  and 
not  by  law,  the  Government  had  the  decision  in  its  hands  from  two 
points  of  view:  nobody,  however,  has  at  any  time  suggested  that  the 
Government  assume  the  entire  responsibility.  See  the  report  of  M. 
Antonin  Proust  on  the  budget  of  Fine  Arts  for  1891. 

*  It  is  always  understood  that  with  regard  to  revenues  the  attached 
schedules  do  not  form  the  subject  of  a  detailed  vote,  as  is  the  case 
with  expenditures,  since  the  budgetary  specification  ceases  to  be  in- 
volved in  that  connection. 


304 


RESULT  OF  VOTING  BY  CHAPTER 

the  end  is  reached.  The  amendments,  emanating  from  the 
legislative,  are  discussed,  together  with  articles  to  which  they 
refer;  besides  amendments  there  are  at  times  additional  pro- 
visions. The  author  of  the  amendments,  or  of  the  additional 
provisions,  explains  the  reasons  for  their  existence ;  one  of  the 
deputies  reporting  on  the  budget,  or  the  chairman  of  the  com- 
mission on  budget,  or  a  competent  representative  of  the  Gov- 
ernment answers,  unless  someone  else  does  so,  and  then  the 
amendments  or  the  additional  provisions  are  ballotted  upon.^ 

As  soon  as  each  article  of  the  budget  plan — drafted  by  the 
commission,  or  of  the  plans  resulting  from  parliamentary  in- 
itiative— has  been  definitely  approved,  the  whole  law  is  voted 
on,  the  final  vote  being  by  open  ballot. 

The  budget,  the  discussion  and  voting  of  which  are  thus 
terminated,  is  the  essential  work  of  one  legislature.  Numer- 
ous and  long  sessions  are  devoted  to  this  work  and  they  cover 
a  period  of  about  three  months,  without  mentioning  the  time 
consumed  by  the  commissions  in  studying  the  budget  plan 
and  in  drafting  the  reports.  If  the  voting  of  the  budget  con- 
stitutes the  most  difficult  work  of  the  representatives  of  the 
country,  it  is  at  the  same  time  the  most  powerful  weapon  in 
their  hands. 

^  We  mention,  very  briefly,  in  this  connection,  the  special  procedure 
relating  to  the  submitting  and  the  voting  of  amendments,  because 
this  procedure  applies  to  all  the  laws  in  general.  The  provisions  of 
the  regulations  of  the  Chamber  do  not  come  into  force  with  re- 
gard to  our  subject,  except  in  cases  where  financial  questions  are 
involved. 


305 


CHAPTER  XIV 

THE  BUDGETARY  POWERS  OF  THE  TWO 
CHAMBERS 

The  Two  Branches  of  the  Legislature ;  The  Supremacy  of  the  Lower 
House;  The  Initiative  of  the  Houses  in  Italy;  The  Conflict  Over 
Tolls;  Powers  of  the  Two  Chambers  in  United  States;  In  Case  of 
Conflict;  Disagreement  of  1871 ;  Contest  Over  Army  Appropria- 
tions; Upper  Chamber  Restricted;  Supremacy  of  the  Commons; 
Far-reaching  Act  of  191 1. 

Budgetary  Powers  of  the  Two  Chambers  in  France;  Status  of  Cham- 
bers in  France ;  The  Crux  of  the  Controversy ;  "Voted  by  the  Lat- 
ter" ;  Claims  of  the  Lower  Chamber ;  The  First  and  the  Last  Word ; 
Avoid  Settling  the  Issue;  Proposed  Compromise;  Pressure  on  the 
Senate. 

Voting  the  Budget  by  the  Senate:  Routine  of  Voting;  Official  Jour- 
nal. 


The  Two 
Branches 
of  the 
Legisla- 
ture 


The 

Supremacy 
of  the 
Lower 
House 


According  to  the  constitutions  of  all  countries  having  a  par- 
liamentary form  of  government,  the  representative  assembly, 
which  is  the  original  authority  in  budgetary  matters,  shares 
its  legislative  and  financial  powers  with  another  chamber — 
one  which  is  less  directly  dependent  on  popular  suffrage  than 
the  Chamber  of  Deputies  [elected  assembly]  and  is  often  even 
appointed  by  the  sovereign  himself.  This  chamber  is  called 
either  the  Senate,  the  Chamber  of  Pairs,  the  Chamber  of 
Grandees,  the  House  of  Lords,  etc.,  or,  in  a  more  general  way, 
the  upper  house.  The  budget  law  is  not  finally  enacted  until 
it  is  voted  by  the  two  chambers,  which  together  form  the 
legislature.  When  the  Chamber  of  Deputies,  the  elected  body, 
and  the  upper  house  vote  the  budget  jointly — In  some  cases 
they  do  so  with  unequal  powers — then  the  prerogatives,  if 
any,  rest  with  the  Chamber  of  Deputies  because  of  its  origin. 

The  most  common  of  these  prerogatives  is  that  of  priority, 
the  initiative  in  examining  and  voting  the  fiscal  law.  This  is 
not  an  empty  precedent,  because  priority  in  matters  of  the 
budget  is  almost  equivalent  to  supremacy.  The  party  that 
first  arranges  the  budget  and  puts  its  stamp  on  it  stands  a 
good  chance  to  remain  its  master;  it  becomes  difficult  indeed 

306 


BUDGETARY  POWERS  OF  THE  CHAMBERS 

subsequently  to  upset  the  combination  which  strikes  a  balance 
between  revenues  and  expenditures.  The  majority  of  the 
fiscal  laws  which  are  at  our  disposal  proclaim  the  principle 
that  the  deputies  shall  receive  the  budget  plan  directly  from 
the  executive  and  shall  approve  it  first,  after  which  the  upper 
chamber  takes  its  action.  Only  a  few  exceptions  can  be  cited 
contradicting  this  rule  of  budgetary  priority.-^ 

Italy,  the  United  States,  Sweden  and  other  countries,  with 
the  exception  of  this  prerogative,  give  equal  powers  to  the 
two  assemblies.    Let  us  examine  this  first  group  of  countries. 

The  fundamental  statute  of  March  4,  1848,  still  in  force 
in  Italy,  reads: 

"Article  10.     The  initiative  with  regard  to  laws  shall  The  Initia- 
rest  with  the  King  and  each  of  the  two  chambers.    Every   ^ouggg  j^^ 
law,  however,  imposing  a  new  tax  or  approving  the  bal-   Italy 
ance  sheets  and  the  accounts  of  the  State,  shall  first  be 
submitted  to  the  Chamber  of  Deputises." 

The  Italian  Senate  intervenes  only  in  the  second  place.  But 
it  has  the  power  to  change,  as  it  m^y  deem  proper,  the  budget 
which  the  Chamber  of  Deputies  transmits;  it  can  increase  or 
reduce  the  figures  of  expenditures  and  of  revenues  at  will, 
without  the  previous  decisions  of  the  Lower  House  affecting 
its  initiative. 

Thus,  in  1879,  and  in  the  following  years,  the  Senate  per-  The 
sistently  refused  to  approve  the  abolition  of  the  tolls  for  over^Tolls 
grinding  which  was  voted  by  the  deputies.  The  tolls  for 
grinding,  established  in  1868  upon  suggestion  of  the  Minister 
Cambray-Digny  (Law  of  July  7,  1868),  affected  the  grinding 
of  corn  into  flour,  the  most  essential  thing  of  everyday  life. 
The  political  party  coming  into  power  in  1879  promised  to 
abolish  this  tax  ^  and  the  deputies  voted  on  July  7,  1878,  the 

1  In  the  German  Empire  the  Reichstag,  although  elected  by  uni- 
versal suffrage,  does  not  have  priority  in  re  budget  over  the  Bun- 
desrath  or  upper  chamber  of  the  German  Federation.  In  the  majority 
of  the  States  of  the  United  States  of  America,  priority  is  indistinctly 
attributed  to  the  two  chambers.  In  the  same  way  in  Switzerland, 
the  same  situation  exists  between  the  National  Council  and  the  Coun- 
cil of  the  States. 

See  the  book  of  M.  Morizot-Thibault :  Des  droits  des  Chamhres 
hautes,  ou  Senats,  en  matter e  de  lois  de  finances,  Paris,  1891. 

2  The  tax  on  the  grinding  of  corn  was  from  its  origin  extremely 
unpopular  in  Italy.  The  intervention  of  the  constabulary  was  often 
necessary  to  protect  the  engineers  who  had  to  install  the  meters  and 


THE  BUDGET 


Powers  of 
the  Two 
Chambers 
in  United 
States 


complete  abolition  of  all  tolls  beginning  with  January  i,  1883, 
but  as  the  proceeds  amounted  to  80,000,000,  the  Senate,  con- 
sidering itself  the  guardian  of  the  budgetary  equilibrium, 
deemed  it  proper  to  oppose  so  considerable  a  decrease  of  reve- 
nues without  any  designation  of  new  resources  which  would 
cover  the  deficit  (June  25,  1879).  Accordingly,  the  Senate 
voted  adversely  four  times  in  succession,  until  the  Chamber, 
realizing  the  necessity  of  meeting  the  issue,  voted  a  series  of 
taxes  (an  increase  of  taxes  and  dues  on  alcohol  and  oil,  reor- 
ganization of  the  lottery,  etc.),  the  proceeds  of  which  prom- 
ised to  be  equivalent  to  the  proceeds  of  the  abolished  tax 
(July  19,  1880).  Then,  by  mutual  agreement,  the  odious  toll 
on  grinding  disappeared  definitely  from  the  Italian  budget, 
beginning  with  January  i,  1884. 

The  equality  of  powers  of  the  two  chambers  in  budgetary 
matters,  as  we  have  said,  can  be  found  also  in  the  United 
States,  the  Constitution  of  which  recites :  "Section  7.  All 
bills  for  raising  revenue  ^  shall  originate  in  the  House  of 
Representatives;  but  the  Senate  may  propose  or  concur  with 
amendments  as  on  other  J)ills."  (Federal  Constitution  of  the 
United  States  of  September  17,  1787.^)    The  Etudes  de  droit 

to  control  their  working  in  the  mills.  The  large  proceeds  of  the  tax 
were  its  only  excuse.  The  very  moment  that  the  Italians  considered 
themselves  to  be  wealthy  enough,  they  did  not  hesitate  to  repudiate 
(very  justly  by  the  way)  this  tax  imposed  on  an  object  of  first  class 
importance  which  fiscal  science,  as  shown  by  us  in  the  Systemes 
gcneraux  d'impots  absolutely  condemns  in  accordance  with  popular 
sentiment. 

^  "The  text  of  the  Constitution  proposed  originally  at  the  Conven- 
tion in  Philadelphia  provided  that  the  bills  for  raising  or  appropriat- 
ing money,  that  means  that  bills  of  revenues  as  well  as  the  bills  of 
expenditures  should  first  pass  through  the  House.  The  text  which 
was  finally  adopted  did  not  carry  this  privilege  except  for  the  first 
category  of  bills  (for  raising  revenue)"  {Etudes  de  droit  constitii- 
tionnel,  by  E.  Boutmy).  Nevertheless,  the  author  adds,  according 
to  a  custom  which  is  as  old  as  the  Constitution  itself,  the  bills  of 
expenditures  pass,  just  as  the  bills  of  revenue,  first  through  the  House 
of  Representatives. 

2  There  are  in  existence  in  the  United  States  three  distinct  powers : 
the  Executive  Power,  the  House  of  Representatives  and  the  Senate, 
each  with  its  own  domain  defined  by  the  Constitution:  "The  Con- 
vention of  Philadelphia,"  says  Boutmy,  "permeated  to  a  degree  of 
superstition  by  the  theory  of  Montesquieu,  exercised  all  possible  care 
to  keep  these  powers  separate.  The  routes  which  the  Convention 
traced  for  these  powers  are  invariably  parallel;  they  do  not  cross 
each  other  anywhere.  They  can  see  each  other,  they  can  threaten 
each  other  with  looks  or  with  distant  words;  but  there  is  no  cross- 

308 


BUDGETARY  POWERS  OF  THE  CHAMBERS' 

constitutionnel,  by  Botitmy,  defines  the  budgetary  powers  of 
the  Senate  as  follows: 

"The  fiscal  bills  voted  by  the  Representatives  are  sent 
to  the  Senate,  which  has  the  right  to  amend  and  fre- 
quently avails  itself  of  this  right.  .  At  times  it  has  even 
abused  this  right.  When  a  fiscal  bill,  amended  by  the 
Senate,  is  returned  to  the  House,  it  is  generally  very  late 
in  the  session.  It  is,  therefore,  the  rule  with  the  House 
not  to  take  cognizance  of  the  amendments  of  the  Senate : 
the  House  may  refuse  to  accept  them  without  even  hear- 
ing them.  If  the  Senate  insists  on  its  amendments,  by 
mutual  agreement  the  bill  is  referred  to  a  joint  confer- 
ence committee  formed  of  three  Representatives  and  three 
Senators.  This  committee  examines,  discusses,  and  makes  l"  Case  of 
an  adjustment  which  it  submits  together  with  its  report  "  ^^^ 
to  both  Houses  of  Congress.  Does  a  detailed  discussion 
then  begin  in  the  House?  Not  at  all.  .  .  .  The  House 
as  well  as  the  Senate  must  either  accept  or  reject  the 
entire  bill  as  reported  from  the  committee.  It  is  easy  to 
see  the  immense  advantage  which  the  Senate  derives  from 
such  a  procedure.  ...  It  suffices  that  three  Senators, 
the  members  of  the  committee,  show  a  little  determination 
in  order  to  carry  through  the  majority  of  amendments 
proposed  by  the  Senate,  which  the  Representatives  will 
be  forced  to  ratify  for  lack  of  time  to  do  anything  else.*' 

The  American  Senate  has  at  various  times  availed  itself  of  Disagree- 
the  prerogatives  with  which  it  was  endowed  by  the  Constitu-  "l^"*  °^ 
tion.  In  1 87 1,  for  example — at  the  time  the  budgets  [appro- 
priation bills]  were  balanced  with  large  [revenues]  surpluses, 
which  had  already  permitted  the  abolition  of  nearly  1,200,- 
000,000  of  taxes  since  the  end  of  the  Civil  War — the  Sena- 
tors were  advocates  of  a  protective  tariff  and  the  Representa- 
tives of  the  principle  of  free  trade;  not  being  able  to  agree  on 
the  subject  of  tax  reduction,  it  became  necessary  to  convene 

road  where  they  can  meet,  clinch  and  engage  in  a  struggle  which 
would  give  to  the  one  or  to  the  other  the  advantage  and  the  last 
word." 

The  House  of  Representatives  and  the  Senate  together  form  the 
Congress,  in  which  they  represent  two  different  elements:  the  House 
of  Representatives  is  representative  of  the  people  of  the  United 
States,  which  is  considered  to  form  a  single  nation.  The  Senate  per- 
sonifies the  Federal  States. 

309 


THE  BUDGET 


Contest 
Over  Array 
Appropria- 
tions 


Upper 

Chamber 

Restricted 


several  conference  committees.  The  House  wanted. to  reduce 
the  customs  dues,  while  the  Senate  insisted  on  reducing  the 
internal  revenues  only.  The  conflict  lasted  more  than  a 
month.  Finally,  an  agreement  was  reached  to  reduce  taxes 
by  260,000,000  francs  instead  of  100,000,000  francs,  in  order 
to  satisfy  everybody  concerned. 

At  the  end  of  the  fiscal  year  1875- 1876,  the  discussions 
were  renewed  on  the  Army  Appropriation  Bill.  The  House 
was  firmly  bent  on  reducing  these  appropriations  to  an  extent 
which  seemed  excessive  to  the  Senate :  a  series  of  items  was 
affected,  totaling  15,000,000  francs.  On  the  general  princi- 
ples they  failed  to  come  to  an  agreement.  The  fiscal  year 
expired  without  a  vote  being  taken :  the  payment  of  the  Army 
had  to  be  suspended.  "We  have -an  army,"  said  the  Presi- 
dent's message,  "which  is  authorized  by  law  and  has  a  just 
claim  to  pay,  with  no  funds  available  for  this  purpose."  Fi- 
nally, a  temporary  appropriation  was  voted,  and  then  a  new 
adjustment,  bringing  the  definite  reduction  down  to  10,000,- 
000  francs,  enabled  the  War  Department  to  resume  its  regular 
activities.  No  conflict  of  such  grave  nature  has  since  oc- 
curred. 

In  another  group  of  states — ^Belgium,  Holland,  Prussia  and 
England — there  are  restrictions  in  addition  to  giving  the  in- 
itiative to  the  lower  house,  limiting  the  powers  of  the  upper 
chamber. 

Thus,  no  new  expenditure,  or  any  increase  of  a  tax,  can 
be  proposed  or  voted  initially  by  the  Belgian  Senate.^  In 
Holland  the  rights  of  the  First  Chamber  of  the  States  General 
consist  only  in  approving  or  rejecting  en  bloc  the  fiscal  law. 
In  Prussia,  the  upper  house  can  approve  or  reject  the  budget 
en  bloc. 

In  England,  "according  to  a  rule  which  has  the  force  of 
law  without  being  written  down  in  any  statute,^  the  initiative 


^  The  Belgian  Senate,  however,  can  amend  or  turn  down  the  entire 
fiscal  plan  emanating  from  the  Chamber  of  Representatives. 

2  Boutmy  wrote  on  this  subject  as  follows:  "In  1793  Herault  de 
Sechelles  made  a  demand  to  the  National  Library  for  a  copy  of  the 
Laws  of  Minos.  The  same  mistake  would  be  committed  if  someone 
should  suggest  looking  for  the  'text*  of  the  English  Constitution." 
Further  on  he  adds  with  regard  to  the  House  of  Lords:  "Let  the 
Constitutional  texts  be  consulted  on  the  division  of  Parliament  into 
two  Chambers.  This  division  originated  before  1350  and  has  perpetu- 
ated itself  since  without  any  law.  And  how  about  the  right  of  pri- 
ority of  the  House  of  Commons  in  matters  of  taxation?    This  right, 


BUDGETARY  POWERS  OF  THE  CHAMBERS 

with  regard  to  fiscal  laws  rests  with  the  House  of  Com-  Supremacy 
mons,"  says  Lord  Brougham  in  his  article  in  the  Dictionnaire  commons 
de  la  folitique.  The  House  of  Lords  in  England,  like  the 
upper  chambers  of  Holland  and  of  Prussia,  possesses  no 
other  alternative  than  to  approve  or  to  disapprove  the  budget 
en  bloc.  In  England  this  results  not  so  much  from  a  fatal  lack 
of  power  as  from  the  fact  that  the  "appropriation  act,'*  the 
budget  itself,  is  voted  by  the  Commons  about  April,  as  has 
been  shown  in  a  preceding  chapter.^  At  this  time  of  year  the 
House  of  Lords  has  a  space  of  time  obviously  insufficient  for 
a  study  of  the  fiscal  law  [after  it  is  passed  in  the  lower 
house]  and-  will  not  take  the  risk  of  sending  it  back  to  the 
Commons.  The  budgetary  function  of  the  House  of  Lords, 
therefore,  is  only  a  formality,  analogous  to  the  solemn  act  of 
royal  sanction  given  to  the  "appropriation  act." 

The  formulas  used  in  the  annual  Speech  from  the  Throne 
suffice  to  show  this  fact:  "My  Lords  and  Gentlemen,"  says 
the  king  in  the  beginning.  He  says:  "Gentlemen  of  the 
House  of  Commons,"  however,  when  finances  are  men- 
tioned. "Gentlemen  of  the  House  of  Commons,  I  have  given 
orders  that  a  statement  of  the  funds  necessary  for  the  opera- 
tions of  the  year  be  submitted  to  you.  .  .  ."  Then  returning 
to  foreign  afifairs,  the  King  again  refers  to  the  Lords  and 
Gentlemen.  The  act  of  Parliament  of  August  i8,  191 1,  has 
greatly  reduced  the  subordinate  position  of  the  House  of  Lords 
in  financial  matters. 

In  fact,  after  the  budget  for  1909-19 10,  presented  by  Mr.    Far-reach- 
Lloyd-George  and  voted  by  the  Commons  on  November  4,    ^^^^^^^^ 
1909,  was  rejected  by  the  House  of  Lords,^  a  grave  conflict 
broke  out  and  the  dissolution  of  Parliament  followed.    It  was 
necessary  to  submit  the  issue  to  the  people.     As  the  elections 

which  is  expressly  stipulated  in  the  Constitution  of  the  United  States 
and  in  our  Constitution,  is  based  in  England  only  upon  long  usage." 
(Etudes  de  droit  constitutionnel,  above  cited.) 

1  [The  author  must  refer  to  voting  on  the  Estimates  in  committee 
of  the  whole  before  the  "budget"  or  general  financial  plan  is  sub- 
mitted to  the  House  of  Commons  in  what  is  known  as  the  budget 
speech.  The  annual  finance  bills  usually  are  introduced  and  passed 
later  in  the  year. — The  Editor.] 

2  On  November  30,  1909,  the  Lords  voted  the  following  amendment 
by  Lord  Lansdowne :  "The  House  of  Lords  could  not  possibly  give 
its  consent  to  the  fiscal  law  so  long  as  the  latter  was  not  submitted 
to  the  judgment  of  the  people."  Three  hundred  and  fifty  votes  were 
cast  pro  and  75  contra. 


THE  BUDGET 

returned  a  majority  supporting  the  Executive,  the  House  of 
Lords  had  to  accept  a  reduction  of  power  in  financial  matters, 
which  became  a  law  by  the  act  of  Parliament,  August  i8,  191 1. 
The  main  provisions  of  this  historical  document  are  these: 
( I )  The  money  bills  ^  are  presented  first  to  the  House  of 
Commons  (this  is  but  a  confirmation  of  an  old  rule)  ;  (2)  the 
concurrence  of  the  House  of  Lords,  in  order  to  give  the 
money  bills  their  full  effect,  is  requested.  It  is  noteworthy 
how  vague  and  alarming  is  the  term  concurrence ;  (3)  one 
month's  time  is  given  to  the  House  of  Lords  for  the  study 
and  discussion  of  the  money  bill,  and  for  expressing  its 
opinion  thereon;  (4)  at  the  expiration  of  one  month,  if  the 
House  of  Lords  should  refuse  to  approve  or  fail  to  reach  a 
decision,  the  bill,  by  the  sole  will  of  the  House  of  Commons, 
is  transformed  into  a  definite  law,  after  being  sanctioned  by 
the  Crown. 

In  financial  matters  the  House  of  Lords  is  thus  reduced  to 
the  rank  of  an  academic  body  which  can  discuss,  write  and 
influence  public  opinion  during  one  month,  but  which  has 
only  the  right  of  deciding  in  the  affirmative.  The  House  of 
Lords  is  henceforth  forbidden  to  reject  a  money  bill. 


Budgetary  Powers  of  the  Two  Chambers  in  France 

It  may  be  surprising  that  this  review  of  the  leading  coun- 
tries does  not  include  France.  As  a  matter  of  fact,  it  is  diffi- 
cult to  assign  a  proper  place  to  France.  Each  year  the  ques- 
tion of  the  respective  rights  of  the  Chamber  and  of  the  Senate 
is  brought  up  in  vain.  The  Senate  generally  yields  with 
praiseworthy  abnegation,  but  without  receding  from  its 
claims,  which  defers  the  legal  settlement  of  the  question. 

The  conflict  turns  entirely  on  the  interpretation  of  the  text 
of  the  Constitution,  which  must  be  read  with  careful  atten- 
tion because  each  side  finds  in  this  text  its  own  justification : 
"the  initiative  and  the  making  of  laws  rests  jointly  with  the 
Senate  and  the  Chamber.     The  fiscal  laws,  however,^  must 


1  The  term  "money-bill"  applies  to  every  law  concerning  national 
(not  local)  finances,  budgets,  loans,  accounting,  treasury,  etc. 

2  All  the  laws  on  appropriations  and  on  taxes  are  included  in  the 
term  "fiscal  laws"  as  used  by  the  Constitution.  The  commentary  on 
Constitutional  laws  by  M.  Poudra  specifies  this  formally.  He  adds 
as  follows:  "From  this  general  term  'fiscal  laws'  results  the  fact 
that  all  the  laws  which  concern  the  public  finances  in  any  degree 


BUDGETARY  POWERS  OF  THE  CHAMBERS 

be  submitted  first  to  the  Chamber  of  Deputies  and  voted  by 
the  latter."  (Constitutional  law  of  February  28,  1875,  arti- 
cle 8.)  The  confusion  grows  out  of  the  four  last  words: 
voted  by  the  latter. 

In  order  to  avoid  embarrassment,  let  us  quote  verbatim  the 
explanations  of  the  partisans  of  the  one  or  of  the  other  as- 
sembly. 

Article  8  of  the  Constitution  of  1875  is  interpreted  by  the   The  Crux 
champions  of  the  Senate's  position  in  the  following  words:    Controversy 

"It  cannot  be  expressed  more  clearly  and  in  more  pre- 
cise terms  that  the  two  Chambers  have  absolutely  equal 
rights,  yielding,  however,  to  the  Chamber  of  Deputies 
priority  with  regard  to  fiscal  laws,  which  constitutes  a 
considerable  advantage,  because  the  party  making  the 
budget  remains  its  master." 

As  for  the  words,  voted  by  the  latter,  which  form  the  crux 
of  the  controversy,  the  sponsor  for  the  Constitutional  law  of 
1875  comments  as  follows: 

"We  have  used  the  words  'submitted'  and  Voted'; 
we  have  combined  these  two  terms.  Why?  It  was  in 
order  to  avoid  every  possible  subterfuge  and  the  possi- 
bility of  anybody's  saying  that  the  law  has  been  sub- 
mitted to  the  Chamber;  if  the  Chamber  drags  along  and 
shows  bad  faith,  then  we  will  submit  the  bill  to  the  Sen- 
ate, which  can  vote  on  it  and  in  this  way  we  shall  be 
in  a  position  to  bear  hard  on  the  Chamber."  (Speech 
of  Senator  Wallon,  July  24,  1884.) 

Thus,  according  to  this  commentary,  the  words  and  voted 
by  the  latter  were  added  to  the  word  submitted  for  the  sole 
purpose  of  preventing  the  Executive  from  withdrawing  the 
fiscal  bill  from  the  Chamber  of  Deputies  immediately  after 
submitting  it,  in  case  the  Executive  were  so  inclined. 

So  far  as  the  deputies  are  concerned,  the  meaning  to  be    "Voted  by 
given  to  the  words  and  voted  by  the  latter  is  entirely  dif- 
ferent.    First,  they  assert:  that  the  National  Assembly  voted 
Article  8  of  the  Constitution  of  1875  without  discussion;  that 

shall  be  submitted  first  to  the  vote  of  the  deputies.  This  obligation 
exists  for  the  laws  which  bear  on  the  finances  of  municipalities  and 
of  the  departements,  as  well  as  for  those  which  bear  on  the  finances 
of  the  State." 


the  Latter' 


THE  BUDGET 

the  deputy  who  reported  on  the  constitution  could  not  possibly 
judge  retrospectively  the  intention  of  the  voters  on  the  basis 
of  a  remote  reminiscence  of  his  own  intention;  that  the  text 
alone  is  to  be  trusted.  What  does  it  mean,  if  not  that  the 
Chamber  of  Deputies  must  approve  all  financial  measures  be- 
fore they  can  be  discussed  by  the  Senate?  "The  fiscal  laws 
must,  in  the  first  place,  be  submitted  to  the  Chamber  of  Depu- 
ties and  voted  by  the  latter."  Therefore,  when  the  Chamber 
of  Deputies  has  failed  to  enter  an  expenditure  in  the  budget, 
when  it  has  failed  to  sanction  the  tax,^  or  when  it  has  expressly 
rejected  a  proposition  of  revenue  or  of  expenditure  formu- 
lated by  the  Government,  the  Senate  cannot  discuss  the  sub- 
ject further.  How  and  what  would  the  Senate  discuss,  as  its 
own  initiative  cannot  supply  it  with  a  text?  In  a  word,  all 
financial  plans  submitted  to  the  Senate  must  previously  have 
been  voted  by  the  other  assembly. 

"Either  the  words  are  meaningless  or  Article  8  of  the 
Constitutional  law  has  this  meaning:  that  a  fiscal  law 
must  first  be  voted  by  the  Chamber  of  Deputies  or  else 
it  cannot  be  voted  by  the  Senate.  If  it  were  admitted 
that  the  Senate  could  vote  first  on  an  appropriation  or 
a  tax  measure  and  such  measure  become  law  by  the  sub- 
sequent approval  of  the  Chamber,  it  would  mean  that 
the  Chamber  has  sunk  into  the  second  place,  while,  in 
fact,  it  should  vote  first.  Gentlemen,  this  is  absolutely 
obvious."  (Speech  of  Deputy  Jules  Roche,  session  of 
December  30,  1883.  )2 

1  The  Senate,  confronted  by  a  bill  on  shooting  before  it  was  sub- 
mitted to  the  Chamber  of  Deputies,  found  itself  stopped  by  a  legiti- 
mate scruple,  coming  to  the  article  determining  the  price  of  shooting 
permits.  Did  it  have  the  right  to  determine  the  rate  of  such  a  tax? 
The  Senate  decided  to  pass  the  thing  over  without  expressing  its  opin- 
ion on  the  principle,  the  application  of  which  the  Senate  deemed  to 
be  only  of  secondary  importance  in  this  particular  case.  (Session  of 
the  Senate  of  November  20,  1886,  Amendments  of  M.  Bozerian.) 

In  the  same  way,  in  the  course  of  the  discussion  on  the  general 
tariff  of  custom  dues,  several  deputies  pretended  that  the  Senate  had 
no  right  to  'change  the  vote  of  the  Deputies,  because  a  question  of 
taxation  was  involved.  "The  laws  on  custom  dues  were  never  con- 
sidered as  laws  on  taxation.  From  the  point  of  view  of  the  Consti- 
tution, this  question  cannot  be  raised,"  said  the  Deputy  reporting  on 
the  budget  (Chamber  of  Deputies,  December  21,  1891),  and  the 
Chamber  passed  over  the  matter. 

2  Several  interpreters  of  the  word  "voted,"  having  pretended  that, 


BUDGETARY  POWERS  OF  THE  CHAMBERS 


Further,  it  is  maintained  that  the  Chamber  possesses  not 
only  priority  but  the  first  and  the  last  word  in  financial  mat- 
ters. Strictly  speaking,  this  prerogative  of  the  last  word  can 
easily  be  conceived  in  dealing  with  items  which  the  Chamber 
has  cut  out  of  the  budget;  in  each  case,  the  Deputies  have  the 
last  word,  because  they  have  deprived  the  Senate  of  the  possi- 
bility of  discussing  the  items  eliminated.  With  regard,  how- 
ever, to  the  items  retained  in  the  budget,  the  theory  of  the 
last  word  resting  with  the  Deputies  is  no  longer  based  on  any 
argument  of  constitutionality.  This  theory  rests  on  the  fol- 
lowing reasoning :  in  case  of  a  conflict,  one  of  the  two  parties 
must  yield;  which  one  shall  it  be,  if  not  the  Senate,  which  is 
designated  by  the  Constitution  as  inferior  to  the  Chamber  in 
matters  of  budget? 

Although  badly  supported,  as  we  have  seen,  the  formula  of 
the  first  and  of  the  last  word  did  not  fail  to  gain  ground. 
Its  partisans  proclaimed  it  on  every  possible  occasion: 
"With  the  Chamber  of  Deputies,  regardless  of  the  name 
which  is  given  the  latter,  rests  the  first  and  the  last  word 
in  financial  matters."  (Speech  of  Gambetta,  December  28, 
1876.) 


Claims  of 
the  Lower 
Chamber 


The  First 
•and  the 
Last  Word 


"It  must  be  asserted  positively  and  put  above  every 
discussion  that,  when  the  Chamber  of  Deputies  has  spoken 
its  first  word  with  respect  to  the  fiscal  law,  the  Senate 
can,  of  course,  through  its  reporting  Senator,  through  its 
Commissions  and  through  the  Cabinet  protest  to  the 
Chamber  and  say  that  the  Senate  considers  such  and  such 
tax  or  the  annulment  of  certain  appropriations  to  be  un- 
just and  untimely;  this,  however,  is  the  only  right  the 
Senate  has.  Once  these  protests  of  the  Senate  are  pre- 
sented to  the  Chamber,  the  power  of  the  Senate  is  ex- 
hausted. The  Chamber  of  Deputies  decides  in  the  last 
instance,  says  yes  or  no,  adopts  or  rejects — and  there  is 
no  appeal  from  and  no  annulment  of  this  vote.'*  (Plan 
of  revision  submitted  by  the  Government,  January  14, 
1882.) 


when  the  Chamber  rejects  a  provision,  this  provision  having  formed 
the  subject  of  a  vote,  it  enters  the  sphere  of  the  Constitutional  com- 
petency of  the  Senate,  the  same  speaker  answered  as  follows :  "You 
should  then  say  also  that,  when  a  law  has  been  rejected  by  the  Sen- 
ate and  by  the  Chamber  of  Deputies,  it  has  been  passed  by  the  two 
Chambers." 


315 


Avoid 
Settling 
the  Issue 


THE  BUDGET 

A  constitutional  convention,  the  only  authority  with  the 
right  to  settle  this  question,  has  refrained  from  pronouncing 
itself  on  the  subject.  Convened  in  Versailles  in  1884,  and 
confronted  by  a  special  plan  of  revising  article  8  of  the  Con- 
stitution, the  convention  eliminated,  by  a  formal  vote  on  the 
previous  question,  all  discussion  relating  to  the  powers 
of  the  Senate  in  matters  of  finance.  In  the  same  way,  each 
year,  the  Chambers  avoid  settling  the  controversy.^ 

A  solution  has  been  looked  for  by  many  people  without 
recourse  to  the  puzzling  text  of  the  Constitution.  The  Execu- 
tive, in  1888,  said  wisely  that  each  assembly  should  have  the 
last  word  in  a  sense  which  is  most  favorable  to  the  taxpayers. 

"This  is  the  doctrine  of  the  alternating  last  word  which 
is  given  according  to  the  circumstances  of  the  case,  to 
the  one  or  to  the  other  Chamber.  I  said  to  the  Senate : 
'You  have  the  last  word  to  prevent  the  authorizing  of  a 
new  expenditure.'  In  the  same  way  the  Chamber  has  the 
last  word  to  defeat  the  making  of  an  appropriation  which 
it  initially  refused  to  pass.'*  (Speech  of  M.  Jules  Ferry, 
President  of  the  Council,  Session  of  the  Chamber  on 
March  9,  1885.) 


Proposed 
Compromise 


"It  is  good  policy  for  each  Chamber  to  yield  after  its  sec- 
ond deliberation,  before  the  will  of  the  other  Chamber,  when- 
ever the  question  of  abolishing  or  reducing  an  expenditure 
comes  up."     (Report  of  M.  Dauphin,  March  19,  1885.) 

It  would  be  possible  to  accept  a  compromise  on  the  follow- 
ing basis:  (i)  in  case  of  disagreement,  the  interest  of  the 
taxpayer  shall  prevail;  (2)  each  of  the  two  Chambers  shall 
be  able  to  prevent  the  other  from  changing,  through  budg- 
etary  procedure,   expenditures  established  by   organic  laws. 

^  The  President  of  the  cabinet  has  given  the  following  description 
of  the  contest  in  an  official  report  of  1882:  "The  Chamber  of  Depu- 
ties rejects  an  appropriation;  the  Senate  takes  it  up  again  and  adopts 
it.  The  budget  comes  back  to  the  Chamber.  The  Chamber  cuts  this 
appropriation  out  for  the  second  time.  This  is  a  shuttle,  a  continu- 
ous coming  and  going  which  only  ends  because  the  31st  of  December 
is  coming,  a  time  where  the  prolongation  of  the  conflict  threatens 
to  stop  everything,  the  payments  of  coupons  on  bonds,  the  salaries 
of  the  Army  and  of  the  civil  officials.  .  .  .  Then  only  a  compromise 
is  made  as  well  as  can  be  done."  The  President  added  on  his  own 
responsibiHty  as  follows:  "As  bad  as  possible."  (Statement  of  Sup- 
porting Arguments  presented  by  the  President  of  the  Cabinet  with 
regard  to  the  plan  of  revising  the  Constitution,  January  14,  1882.) 

316 


BUDGETARY  POWERS  OF  THE  CHAMBERS 

Political  prejudices,  however,  do  not  seem  to  yield  to  any 
idea  of  adjustment.  Furthermore,  certain  philosophically-in- 
clined minds  take  this  view  of  it: 

"Let  us  settle  conflicts  from  day  to  day  as  they  arise 
...  let  us  beware  of  too  absolute  formulae."  (Speech 
of  the  President  of  the  Council,  March  9,  1885.)  "This 
is  the  very  foundation  of  the  parliamentary  regime :  this 
is  one  of  the  conditions  resulting  from  the  existence  of 
two  Chambers  and  I  warn  you  against  discontinuing  it. 
Since  our  Constitution  has  sanctioned  a  division  of  the 
Legislative  Power,  it  admits  the  possibility  if  not  the 
necessity  of  conflicts.  The  Chambers  must  be  permitted 
to  carry  on  negotiations,  and,  at  times,  they  may  become 
wearisome,  but  they  are  the  conditions  of  a  parliamentary 
regime.  Such  negotiations  tend  to  bring  about  an  agree- 
ment, because  the  Constitution  makes  conciliation  a  politi- 
cal necessity  of  everyday  life."  (Speech  of  Deputy  Ri- 
bot,  May  9,  1885.) 

These  disputes  are,  more  familiarly  speaking,  family  quar- 
rels, dissensions  between  husband  and  wife,  each  of  whom, 
however,  could  not  possibly  do  without  the  other;  the  link  is 
indissoluble  and  nobody  desires  to  break  it. 

We  were  right,  therefore,  until  the  status  is  more  clearly 
fixed,  in  not  assigning  definite  classification  to  France  among 
the  nations  having  an  upper  chamber. 

It  must  be  added,  however,  that  in  France  the  Senate  is 
handicapped  because  of  the  late  date  on  which  the  deputies  Pressure 
submit  the  budget.  This  fact  is  more  eflFective  than  those  °"  *^^ 
restrictions  discussed  above.  The  assembly  at  the  Luxem- 
bourg must,  within  a  few  weeks,  under  the  threat  of  a  con- 
flict ^  (under  the  threat  of  being  held  responsible  for  the 
douzidmes  promsoires) ,  examine,  discuss  and  vote  the  fiscal 

^  "This  means  a  conflict  and  I  came  to  ask  the  Senate  not  to  provoke 
any."  This  phantom  of  a  conflict  succeeds  without  fail  in  getting  the 
votes  of  the  Senate  in  spite  of  the  inadequate  time.  "Gentlemen,  I 
came  to  ask  the  Senate  to  kindly  vote  the  budget,  which  will  be  pub- 
lished tomorrow  morning,  immediately.  ...  I  declare  to  you  that  I 
am  forced  to  make  an  appeal  to  your  patriotism,  to  your  wisdom,  in 
order  to  make  you  accept  the  budget  as  it  is  submitted  to  you  by  the 
Chamber.  There  is  an  absolute  urgency,  gentlemen,  for  you  to  do  it." 
(Speech  of  M.  Tirard,  President  of  the  Cabinet  and  Minister  of 
Finance.    Senate,  May  30,  1888,  in  the  evening.) 

See  also  the  sessions  of  July  2,  1889,  August  6,  1889,  August  6, 


THE  BUDGET 

law,  which  for  the  last  ten  months  has  been  under  considera- 
tion in  the  Palais  Bourbon.  Strong  words  of  patriotic  abne- 
gation, of  devotion  to  the  public  welfare,  of  the  spirit  of 
unity,  are  invoked  in  order  to  compel  the  Senate  to  yield. 
The  Senate  protests  and  often  succeeds,  even  in  the  short  time 
allotted,  in  modifying  advantageously  the  financial  program. 

Voting  the  Budget  by  the  Senate 

The  discussion  and  the  voting  of  the  budgets  follow,  as 
we  have  said,  the  same  procedure  in  the  Senate  as  they  do  in 
the  Chamber  of  Deputies.  After  the  work  of  the  commis- 
sions has  been  completed,  a  general  discussion  is  opened, 
which  is  followed  by  a  discussion  by  article,  in  which  each 
article  of  the  bill  and  each  chapter  of  expenditure  shown  on 
the  attached  schedules  forms  the  subject  of  a  special  vote. 
Then,  after  the  various  parts  of  the  bill  have  been  adopted 
in  succession  by  open  vote,  the  entire  amount  is  voted.  It 
seems  superfluous  again  to  go  over  the  details  of  these  for- 
malities. Let  us  note,  however,  that  when  disagreements 
arise  and  the  budget  goes  back  and  forth  between  the  assem- 
blies, the  discussion  and  the  vote  refer  only  to  the  points  in 
dispute.  In  general,  after  two  or  three  conferences  and  under 
pressure  of  time,  an  agreement  is  reached  on  a  basis  of  mu- 
tual concessions. 

The  budget  thus  becomes  a  law  of  the  State,  which  law 
the  Executive  Power  publishes  within  the  regulation  time  and 
in  regular  manner;  the  full  text  is  published  in  extenso  in  the 
Journal  Officiel. 

Let  us  now  inquire  as  to  how  long  a  period  for  its  execu- 
tion is  allotted  the  fiscal  law,  made  definite  in  the  manner 
described  above. 

1890,  etc.,  and  finally  the  sessions  at  the  end  of  the  year  1895,  when, 
since  the  submitting  of  the  report  of  the  commission  (December  18), 
only  twelve  days  were  left  to  the  Senate  for  discussing  and  voting 
the  budget  for  1896.  The  budget  for  1908  had  to  be  voted  by  the 
Senate  within  eight  days.  The  first  speaker  said  when  the  public 
discussion  was  opened:  "Gentlemen,  I  have  to  point  out  to  you  the 
really  strange  conditions — although  not  new  by  any  means — under 
which  we  are  entering  this  laborious  discussion.  This  is  December 
23.  In  seven  days  from  now  we  shall  be  compelled  either  to  vote 
definitely  the  fiscal  law  or  to  vote  the  dousiemes  provisoires."  (Ses- 
sion of  December  23,  1907.)  In  the  evening  of  December  31,  the 
budget  for  1908  was  voted  and  published. 

318 


CHAPTER  XV 
ANNUAL  VOTING  OF  THE  BUDGETS 

Annual    Budgets;    Some    Exceptions;    Bismarck's    Budget   Proposal. 

Sections  of  Budgets  Voted  for  Several  Years:  Consolidated  Fund; 
Magnitude  of  the  Consolidated  Fund;  No  Consolidated  Fund  in 
France;  A  Real  Need;  Septennial  Military  Budget;  Sexennial 
Naval  Budget;  English  Naval  Program. 

Douziemes  Provisoires:  A  Make-shift  Arrangement;  They  Reflect 
Misfortunes;  The  Events  of  the  Seventies;  Perpetuations  of  the 
Douziemes;  the  Douziemes  Condemned. 

Votes  on  Account  in  Belgium:  Belgium's  Experience;  Certain  De- 
fects. 

The  English  System  in  Detail :  How  the  Committees  Work ;  Votes 
on  Accounts;  Appropriation  Bill;  Recapitulation;  Annuality  of  the 
Budget. 

In  France,  and  in  nearly  all  countries,  budgets  are  voted  j^^^^^^ 
for  one  year.  In  the  first  place,  this  period  corresponds  with  Budgets 
the  customary  measure  of  human  estimates,  as  has  been 
pointed  out  in  Chapter  V  in  the  discussion  of  accounts  by  fiscal 
period.  Furthermore,  a  year  seems  to  be  the  maximum  of 
time  over  which  legislatures  can  afford  to  give  the  power  [con- 
trol over  the  purse]  out  of  their  hands,  and  the  minimum  of 
time,  which  executives  need  to  put  the  budget  [Act  of  Ap- 
propriation] into  execution.  Thus,  in  England,  Austria,  Ger- 
many, Prussia,  Portugal,  Greece,  the  United  States,  France, 
etc.,  the  budget  is  an  annual  one.^ 

It  may  be  remembered,  however,  that  at  the  time  of  for- 
mulating the  definition  of  the  word  "budget"  ^  we  eliminated 
the  expression  ''annual"  (which  was  unduly  inserted  in  the 
decree  of  May  31,  1862),  because,  in  certain  countries,  budgets  Some 
are  voted  for  several  years.  In  Hesse,  for  instance,  the  Exceptions 
budget  is  triennial,  as  also  in  Saxe-Weimar,  in  Saxe-Meinin- 
gen,  in  Saxe-Altenbourg.     In  Bavaria,  at  one  time,  it  was 

^  [It  may  also  be  added  that  the  most  significant  fact  in  determining 
the  annual  authorizations  of  expenditures  is  that  direct  taxes  are 
levied  on  this  basis. — The  Editor.] 

2  See  Chapter  I. 


THE  BUDGET 

quinquennial;  now  it  is  biennial.^  However,  these  are  excep- 
tional cases. 

The  German  Empire  maintained  its  annual  budget,  in  spite 
of  repeated  attempts  on  the  part  of  Prince  Bismarck  to  make 
it  biennial. 2  The  Chancellor  set  forth  as  a  pretext  the  neces- 
sity of  simplifying  the  machinery  of  the  legislature,  of  avoid- 
ing the  inconveniences  resulting  from  the  coincidence  of  the 
sessions  of  the  local  diets  and  of  the  central  Reiclistag,  and 
finally  of  giving  a  respite  to  the  ministers  and  the  members 
of  the  Federal  Council,  who,  under  existing  conditions,  were 
swamped  with  work.  (Speeches  of  May  5  and  6,  1881.)  Be- 
sides, he  added,  such  a  fusion  of  two  budgets  into  one  would 
have  the  advantage  of  allowing  counterbalancing  errors  to 
spread  over  a  larger  space  of  time,  thus  making  for  greater 
accuracy  in  estimating.  The  Imperial  Government,  however, 
concealed  under  these  pretexts  the  desire  to  obtain  carte 
blanche  for  a  prolonged  space  of  time,  during  which  it  would 
be  free  from  legislative  control.  This  was  precisely  the 
reason  which  prompted  the  members  of  the  Reichstag  to  be 
obstinate  in  their  refusal.^ 

•  ^  "If  the  biennial  budget  is  in  force  in  Bavaria,  considerable 
struggle  was  necessary  to  reduce  to  this  term  the  budgetary  period, 
which  used  to  last  five  years."  (Speech  of  M.  Lasker  in  the 
Reichstag,  March  8,  1891.) 

2  On  February  12,  1880,  Prince  Bismarck  suggested  to  the 
Reichstag  of  the  Empire,  a  plan  for  the  revision  of  the  Constitution, 
which  would  read  as  follows:  'The  budget  is  determined  by  law 
for  a  period  of  two  years,  but  separately  for  each  year."  The  plan 
was  turned  over  to  a  commission  on  March  12,  1881 ;  it  was  rejected 
in  May,  1881. 

In  1882  the  attempt  was  renewed  in  a  different  form:  the  Par- 
liament was  simultaneously  confronted  by  two  budget  bills,  one  for 
the  fiscal  period  1883-1884,  the  other  for  the  fiscal  period  1884-1885. 
The  deputies  did  not  consent  to  these  disguised  suggestions.  On 
December  11,  1882,  the  deputies  limited  themselves  to  turning  over 
to  the  commission,  only  one  of  these  two  budgets,  the  budget  for 
the  fiscal  period  1883-1884,  thus  implicitly  refusing  to  busy  them- 
selves with  the  budget  for  the  fiscal  period  1^4-1885.  Prince  Bis- 
marck, however,  without  being  discouraged,  submitted  forthwith  the 
budget  for  the  fiscal  period  1884-1885,  on  February  9,  1883.  Then  the 
Reichstag  rejected  this  budget  in  a  solemn  way,  chapter  by  chapter,* 
and  the  question  of  biennial  budgets  has  not  been  raised  since. 

^  In  the  course  of  the  discussion,  the  idea  of  the  annuality  of 
budgets  was  expressed  as  follows :  "As  long  as  the  powers  of  human 
intelligence  shall,  with  less  facility,  extend  their  estimates  over  a 
long  space  of  time,  than  over  a  short  one,  it  is  obvious  that  the 
period  of  one  year  for  the  purpose  of  voting  the  budgets  shall  remain 

320 


ANNUAL  VOTING  OF  THE  BUDGETS 


Sections  of  Budgets  Voted  for  Several  Years 

Apart  from  these  examples  of  biennial  or  triennial  budgets, 
which  were  taken  from  smaller  states,  and  the  abortive  at- 
tempts made  in  large  states  [to  have  a  longer  period  than 
one  year  adopted],  several  countries  vote  certain  sections  of 
the  budget   for  several  years. 

First,  in  England,  there  is  the  "Consolidated  Fund."    This 
is  made  up  of  a  considerable  portion  of  revenues  and  of  ConsoH- 
expenditures  established  [as  a  special  fund]  for  a  long  time.   ^^^^^  ^"°^ 
The  origin  of  this  fund  dates,  as  we  have  seen,  to  the  acces- 
sion of  William  III,  after  the  Revolution  of  1688. 

In  order  to  settle  the  boundaries  of  the  respective  rights  of 
the  Crown  and  of  Parliament,  the  Civil  List  was  established 
and  granted  for  the  entire  duration  of  the  reign.  To  this 
permanent  expenditure  were  added  several  others  of  the  same 
nature,  and  the  entire  group  formed  a  separate  fund,  which 
was  declared  exempt  from  annual  verification. 

There  are  certain  revenues  which  have  become  relatively 
permanent.  The  consolidated  funds,  revenues  and  expendi- 
tures are  not  included  in  the  annual  Estimates.  Their  au- 
thorization by  Parliament  continues  so  long  as  new  laws  do 
not  change  it.^ 

The  expenditures,  thus  withdrawn  from  the  annual  vote 
by  the  House  of  Commons  and  which  form  the  Consolidated 
Fund  are  as  follows :  the  Civil  List,  the  interest  on  the  funded 
and  floating  debt,  various  civil  and  military  pensions,  salary 
of  the  Speaker  of  the  House,  the  salaries  of  certain  superior 
courts  of  justice,  of  the  diplomatic  service,  etc. 

On  the  other  hand,  all  taxes,  the  necessity  and  assessment 
of  which,  are  not  contested,  form  a  part  of  the  Consolidated 
Fund.  The  income  tax  and  the  dues  on  tea  only  are  refused 
this  classification,  because  they  are  considered  precarious  and, 
therefore,  should  be  sanctioned  by  annual  vote.  The  other 
taxes  exist  in  England  so  long  as  a  special  law  does  not  change 
or  suspend  their  collectioi].^ 

preferable  to  a  period  of  longer  duration."  (Speech  of  Doctor 
Hanel,  March  8,  1881.) 

^  These  expenditures  and  these  revenues  do  not  pretend  at  all 
to  balance  each  other,  as  will  be  shown  later.  ' 

2  In  France,  as  we  have  already  explained  (by  quoting  the  final 
article  of  all  the  fiscal  laws)  all  the  taxes,  in  spite  of  the  law  im- 
posing them,  could  not  be  collected  unless  by  force  of  the  annual 

321 


THE  BUDGET 


Magnitude 
of  the 
Consoli- 
dated   Fund 


No  Consoli- 
dated Fund 
in    France 


These  consolidated  revenues  and  expenditures  are  by  no 
means  juxtaposed  for  the  purpose  of  forming  a  special  budget. 
The  word  consolidated  expresses  solely  a  character  at- 
tributed to  certain  expenditures  or  to  certain  revenues.  The 
consolidated  expenditures  totaled  925,000,000  francs,  accord- 
ing to  last  accounts ;  ^  the  consolidated  revenues  amounted  to 
more  than  1,000,000,000.  One-fifth  of  the  expenditures  and 
more  than  one- fourth  of  the  revenues  are  thus  exempted  in 
England  from  the  annual  vote. 

So  far  as  expenditures  are  concerned,  why  repeat  in  the 
budgetary  estimates,  why  discuss  and  submit  to  vote  the  in- 
evitable and  almost  invariable  appropriations?  Must  not  the 
public  debt,  for  example,  be  paid  under  all  circumstances  and 
before  all  other  expenditures?  Has  not  the  endowment  of 
the  Civil  List  been  fixed  [by  the  Constitution]  by  virtue  of 
one  of  these  fundamental  covenants,  "The  Declaration  of 
Rights,"  2  the  execution  of  which  is  no  longer  subject  to 
annual  revision? 

The  question  thus  formulated  has  been  discussed  in  France 
since  1789,  when  Mirabcau  suggested  the  allotment  of  a  spe- 
cial endowment  to  the  debt.^    In  1827,  the  question  was  taken 

budget.     "In  France,"  said  Leon  Say,  "the  taxes  are  permanent,  but 
the  authorization  to  collect  them  is  annual." 

1  The  public  expenditures  in  England  are  divided  into  expenditures 
of  the  Consolidated  Fund  and  into  Supply  Services,  composed  as  fol- 
lows for  the  fiscal  year  1912-1913: 

Supply  Services.     Army,   Navy,   Civil 

•    Services,    costs    of    collection,    etc.     3,746,600,000  francs 

Expenditures  of  the  Consolidated  Fund       925,500,000  francs 


Total 
The  expenditures  of  the  Consolidated 
Fund    are    itemized    in    the    Finance 
Accounts  as  follows: 

Civil  List 

Dotations,    perquisites,    payments    to- 
wards local  taxes,  etc. 
Public  Debt 


4,672,000,000  francs 


11,750,000  francs 

369,250,000  francs 
544,000,000  francs 


Round  total  of  the  Consolidated  Fund       925,000,000  francs 

2  See  the  Etudes  de  droit  constitutionnel,  by  E.  Boutmy,  second 
edition  1881. 

3  The  suggestion  of  Mirabeau,  to  allot  certain  taxes  to  the  pay- 
ment of  'the  public  debt  diverged  however,  from  the  idea  of  the 
Consolidated  Fund  in  spite  of  the  agreement  as  to  certain  argu- 
ments: "By  limiting  to  one  year,"  said  Mirabeau,  "the  duration 
of  taxes,  by  which  the  public  debt  is  insured,  would  mean  to  give 

322, 


ANNUAL  VOTING  OF  THE  BUDGETS 

up  under  the  Restoration,  in  a  more  precise  way,  by  an  amend- 
ment to  the  fiscal  law  which  took  the  form  of  an  additional 
article  stipulating  that  henceforth  the  budget  should  be  di- 
vided into  two  parts,  one  of  which,  under  the  title  "Budget 
of  the  Consolidated  Fund"  should  include  the  public  debt,  pen- 
sions, etc. — ^in  other  words,  all  the  fixed  and  permanent  ex- 
penditures— while  the  other,  under  the  title  ^'Extraordinary 
Budget"  should  include  accidental  and  temporary  expendi- 
tures. According  to  the  author  of  the  amendment,  M.  La- 
fitte,  "the  Chambers  would  thus  each  year  be  saved  the  work 
of  revising  expenditures,  the  propriety  of  which  had  already 
been  satisfactorily  shown.  They  would  gain  considerable 
time,  which  could  be  more  usefully  devoted  to  the  examining 
of  new  expenditures."  As  this  suggestion  was  not  adopted, 
the  French  budget  continues  to  repeat  each  year  entire  col- 
umns of  figures  which  the  ministers  and  the  deputies  reporting 
on  the  budget  discuss  over  and  over  again,  only  for  the  purpose  ^ 
of  bringing  about  their  inevitable  voting  with  the  budget.^ 

But  let  us  not  exaggerate  the  importance  of  the  reform,  a  Real 
Its  only  advantage  would  lie  in  saving  work  for  the  deputies :  Need 
the  President  of  the  Chamber  would  have  fewer  texts  to  read ; 
the  representatives  would  have  fewer  votes  to  register.  But, 
as  the  operations  involved  are  inevitable  from  their  very  na- 
ture, their  adoption,  generally  speaking,  would  cause  no  seri- 
ous discussion — their  elimination  from  the  budget  would  ef- 
fect no  change  of  capital  importance. 

Portions  of  many  budgets  are  voted  for  several  years  by 
nearly  all  countries,  particularly  is  this  true  with  respect  to 
the  nations  which  draw  up  long  time  programs  dealing  with 
important  public  works,  military  armaments,  naval  construc- 
tion, etc. 

An  important  illustration  of  this  is  found  in  the  "Septen- 

to  the  Legislative  Body  the  power  to  put  the  Nation  into  bankruptcy 
every  year."  One  of  the  members,  Freteau,  feplied  very  justly  as 
follows:  "It  is  demanded  that  the  tax  for  the  payment  of  the  public 
debt  be  an  immovable  assignat  (assignment).  You  have  partly 
abolished  the  duty  on  salt.  You  will  soon  attack  the  aides  [old  tax 
now  replaced  by  the  indirect  taxes],  and  still  these  two  taxes  have 
been  offered  as  the  security  for  several  loans."  (Session  of  October 
7,  1789.)  This  question  as  we  see  had  only  a  distant  relation  to  the 
subject  of  the  Consolidated  Fund.  The  question  at  issue  was  to 
secure  the  arrears  of  the  public  debt. 

^  Read  on  this  subject  the  interesting  letters  of  Duke  de  Broglie, 
Budget  annuel  et  Budget  personnel,  January,  1888. 


Budget 


THE  BUDGET 

nial  Military  Budget"  in  Germany,  which  supplanted  the  an- 
nual budget  for  the  department  of  war  of  the  Empire.  After 
the  victorious  battle  of  Sadowa  in  1866,  the  new  Constitution 
of  the  North  German  Confederation  stipulated  that  hence- 
forth the  contingent  and  the  military  appropriations  should 
be  determined  once  for  all  without  the  annual  vote  of  the 
Reichstag.  The  Federal  Government,  or  better  the  ministry 
Septennial  of  war  of  Prussia,  was  charged  with  maintaining  the  Ger- 
R!*ri*l!f^  man  army — each  Federal  State  being  forced  to  contribute, 
according  to  the  following  assessments :  recruits  at  the  rate 
of  one  per  cent,  of  the  population,  and  contributions  in  money 
of  225  thaler,  or  843.75  francs  per  man.  This  system,  known 
as  Pauschquantiim,  made  permanent  the  budget  of  the  War 
Department.  After  1871,  the  Empire  temporarily  maintained 
the  Paiischqiiantum;  but  as  the  terms  of  the  contract  were 
no  longer  satisfactory,  the  Empire  looked  for  a  way  to  give 
more  elasticity  to  the  appropriations,  without  renouncing  its 
supremacy  in  the  matter  of  the  budget  of  the  war  department. 
In  order  to  achieve  this  purpose,  the  figures  of  the  effective 
force  of  the  Army,  in  accordance  with  the  law  of  May  2, 
1874,  were  determined  for  seven  consecutive  years,  and  the 
expenditures  were  to  be  annually  sanctioned  by  the  Reichstag. 
But,  as  article  63  of  the  Constitution  of  1871  ^  attributes  to 
the  Emperor  personally  the  supreme  command  of  the  Army, 
the  German  Reichstag,  after  the  effective  force  of  the  Army 
has  once  been  determined,  cannot  avoid  the  obligation  of 
registering  the  suggestions  of  the  Government  relating  to  the 
maintenance  of  the  Army.  Prince  Bismarck  said :  "Shall  our 
Army  be  the  Army  of  the  Emperor  or  of  the  Reichstag? 
This  is  the  question.  Shall  the  effective  force  of  the  Army 
on  peace  footing  be  discussed  each  year?  No,  it  should  not 
be."  2     (Speech  of  January  11,  1887.) 

^Article  63,  of  the  Constitution  of  1871,  is  couched  in  the  follow- 
ing terms:  "The  Emperor  has  the  chief  command  of  the  Army  in 
peace  as  well  as  in  war  and  it  is  his  duty  to  maintain  the  Army 
complete,  ready  for  action  and  to  insure  to  the  best  of  his  ability  the 
army's  moral  and  material  existence,  its  instruction,  its  mobilization, 
and  its  means  of  operation  in  case  of  war." 

2  Besides,  any  parliamentary  objection  to  military  expenditures 
would  find  Httle  backing  in  public  opinion.  The  German  people  seem 
to  be  convinced  that  the  prosperity  that  it  has  enjoyed  until  now,  has 
been  obtained  and  is  guaranteed  by  its  military  force.  The  German 
people,  therefore,  seem  little  inclined  to  bargain  about  sacrifices  to 
be  made  for  the  Army. 

324 


ANNUAL  VOTING  OF  THE  BUDGETS 

Since  the   law  of   May  2,    1874,   the   septennial  military  Sexennial 
budget  has  been  renewed   for  one  period  after  another — in   Naval 
1880,    1887/    1893,    i^9»   etc.     Besides,   a  sexennial  naval  ^"^^^^ 
budget  was  established  by  the  law  of  April  10,  1898,  which 
stipulated  that  "from  1898  until  1903  the  Reichstag  shall  be 
obliged  to  vote  for  the  total  current  naval  expenditures  not 
more  than  408,900,000  marks."     In  1900,  however,  a  new 
naval  program  was  grafted  on  the  one  which  had  not  yet 
been  completed.     This  was  far  more  imposing  and  was  in- 
tended to  cover  a  period  of  another  six  years.     This  latter 
program,  however,  continued  to  grow  as  shown  by  the  plans 
of  April,  1912. 

These  septennial,  sexennial,  quinquennial  and  other  periods  English 
are,  in  fact,  as  we  have  said,  programs  of  expenditures  to  Naval 
be  made  over  several  years.  England  draws  up  such  pro-  ^^°sram 
grams,  involving  hundreds  of  millions,  when  it  lays  the  ^keels 
of  battleships,  the  size  and  number  of  which  shall  exceed  the 
units  of  the  two  largest  naval  powers  combined.  The  pro- 
visions relating  to  such  constructions  necessarily  involve  the 
establishing  of  partial  budgets  extending  over  several  years. 
France  follows  the  same  procedure  with  regard  to  its  navy, 
as  has  been  shown  in  section  IV  of  the  budget  law ;  ^  with  re- 
gard to  its  large  public  works,  particularly  those  which  were 
included  in  the  plan  of  Freycinet  in  1878,  and  the  renewing 
of  its  armaments,  its  coast  defenses,  its  naval  bases,  etc. 
Recapitulating,  we  may  say  in  a  general  way,  that  certain 
large  expenditures — on  account  of  their  nature  and  the  delays 
necessary  in  their  execution — cannot  possibly  be  included  in 
the  annual  budget.  They  are  voted  in  all  countries,  under 
a  more  or  less  distinct  form,  for  several  years. 

DouziEMES  Provisoires 

In  other  cases,  the  voting  of  the  budget  applies  to  a  period 
of  less  than  a  year — ^such  are  the  douzikmes  provisoires.  In 
these,  an  attempt  is  made  to  reduce  instead  of  extend  the 

^  The  septennial  agreement,  in  the  course  of  its  operation  in  1887, 
was  to  expire  only  on  March  31,  1888.  The  Reichstag  wanted  to 
substitute,  first,  a  period  of  five  years  and  even  of  three  years  for 
the  period  of  seven  years  which  was  actually  granted.  This  Reichstag 
was  dissolved.  The  new  assembly  elected  in  the  first  months  of  1887 
showed  a  majority  for  the  Government  and  the  septennial  period  was 
voted  in  April,  1887,  to  last  until  1894. 

2  See  Chapter  IX.  , 

3^5 


THE  BUDGET 


A  Make- 
shift Ar- 
rangement 


They  Re- 
fleet  Mis- 
fortunes 


annual  period,  thus  incurring  a  danger  opposite  to  the  one 
mentioned  above.  The  doumemes  provisoires  may  be  defined 
as :  "an  authorization  to  collect  taxes  and  pay  public  expendi- 
tures over  a  certain  number  of  months,  in  accordance  with  a 
temporary  allotment."  The  term  ''temporary"  becomes  char- 
acteristic in  this  connection :  it  shows  that  these  measures  are 
taken  only  to  bridge  over  the  time  while  the  annual  budget  is 
being  passed.  When  the  fiscal  year  is  about  to  open,  and 
the  Chambers  lack  time  to  reach  a  vote  on  the  whole  fiscal 
law  prior  to  December  31,  a  partial  budget  hastily  prepared, 
covering  a  few  months  and  calculated  grosso  modo,  is  voted. 
The  doiiziemes  provisoires  are,  therefore,  designed  to  legalize 
an  abnormal  situation. 

[In  France]  from  the  beginning  of  the  century,,  the  history 
of  the  douziemes  provisoires ,  sadly  instructive,  has  reflected 
the  succession  of  our  misfortunes — wars  and  internal  dissen- 
sions. The  actual  beginning  of  the  douziemes  provisoires, 
excepting  their  appearance  in  1810,^  dates  from  181 5,  after 
the  downfall  of  the  Empire:  the  douziemes  provisoires  con- 
tinued for  six  years.^  In  1822,^  M.  de  Villele  inaugurated 
his  administration  by  obtaining  from  the  Chambers  the  simul- 
taneous vote  of  the  fiscal  laws  '*  for  1822  and  1823,  only  three 


^  The  decree  of  December  9,  1809,  was  couched  in  the  following 
te,rms:  "Temporarily  and  while  waiting  for  the  publication  of  the 
fiscal  law  the  rolls  of  direct  taxes  for  1810  shall  be  collected  during 
the  first  three  douziemes  provisoires,  beginning  with  the  ordinary 
date  of  the  next  January  i."  These  dousiemes  provisoires,  authorized 
by  a  decree  and  not  by  a  law,  referred  only  to  direct  taxes,  without 
relating  at  all  to  indirect  taxes,  or  to  the  expenditures.  Nothing  was, 
therefore,  more  irregular  than  the  collection  of  taxes,  and  the  pay- 
ment of  expenditures,  beginning  with  January  i,  1810.  This  situation 
fortunately  lasted  only  until  January  15.  On  this  day,  a  law  regu- 
lated the  collection  of  direct  taxes  and  determined  that  "the  indirect 
taxes  collected  in  1809  shall  be  prolonged  during  1810."  (Article  17.) 
The  amount  of  700,000,000  was  subsequently  "allotted  temporarily  for 
the  expenditure  of  1810."  (Article  18.)  Finally,  the  budget  law  for 
1810  was  voted  April  20,  1810. 

2  The  fiscal  periods  1816,  1817,  1818,  1819,  1820,  1821  and  1822 
operated  in  their  respective  beginnings  under  the  douziemes  pro- 
visoires. This  would  mean  seven  years,  if  we  count  the  year  1822, 
which  inaugurated  the  system. 

^  The  plan  of  changing  the  opening  date  of  the  fiscal  year,  sub- 
mitted in  18 1 9,  of  which  we  have  spoken  in  Chapter  VI,  had  already 
attempted  to  put  an  end  to  the  dousiemes  provisoires. 

*  The  fiscal  law  for  the  fiscal  period  1822  was  voted  on  May  i,  1822, 
and  the  fiscal  law  for  the  fiscal  period  1823,  on  August  17,  1822. 

326 


ANNUAL  VOTING  OF  THE  BUDGETS 

months  elapsing  between  them.  The  reestablished  program  of 
regularity  lasted  until  the  end  of  the  Restoration.  The  troubles 
resulting  from  the  Revolution  of  1830  extended  the  douziemes 
provisoires  for  the  fiscal  periods  1831/  1832  and  1833.  In 
1833,  however,  the  Chambers,  after  having  held  a  double 
session,  were  able  to  vote  in  proper  time  the  budget  for  1834. 
The  Monarchy  of  July,  from  first  to  last,  submitted  regu- 
larly each  year  its  budget,  including  that  for  1848,  which 
was  voted  at  the  end  of  1847.  The  Revolution  of  1848  could 
not  fail  to  figure  in  the  list:  the  budget  for  1849  was,  in 
fact,  voted  only  on  May  16,  1849,  four  and  a  half  months 
after  the  beginning  of  the  fiscal  period.  Under  the  Empire, 
the  douzihnes  provisoires  were  unknown. ^ 

After  the  events  of  1 870-1 871,  the  douziemes  provisoires  The  Events 
reappeared.  The  necessity  for  them,  however,  really  existed  sg^^^^tj^g 
only  in  1872.  From  1873  on,  the  law  of  November  20,  1872, 
authorized  the  revenues  and  the  expenditures  in  proper  time. 
We  find,  therefore,  the  douziemes  provisoires  only  in  1878, 
after  the  political  incidents  of  May  16.  In  the  last  days  of 
1877,  the  Chamber  refused  to  grant  the  budget  to  a  Cabinet 
which  did  not  enjoy  its  confidence.^  When  the  new  Cabinet, 
selected  from  the  ranks  of  the  majority,  in  the  Chamber,  had 
come  into  power,  it  was  too  late  to  bother  with  the  fiscal  law, 
so  the  act  of  December  27,  1877,  limited  itself  to  authorizing 
for  a  few  months  only  the  revenues  and  the  expenditures  of 
1878. 

The  irregularities  briefly  discussed  above  resulted  from  ex- 
ceptional and  unfortunate  circumstances.  The  douziemes 
provisoires,  however,  have  been  made  use  of  in  our  parlia- 
mentary procedure  without  the  justification  of  an  emergency, 

^  In  1 83 1,  the  number  of  douziemes  provisoires — increased  to  ten  by 
three  consecutive  laws  (laws  of  December  12,  1830,  April  18  and 
August  18,  1831) — permitted  the  postponement  of  the  vote  of  the 
definite  law  for  the  fiscal  period  1831  until  October  16,  1831.  This 
is  the  greatest  delay  that  ever  occurred.  Generally  speaking,  the 
douziemes  provisoires  apply  only  to  two,  three  or  four  months. 

2  "The  Second  Empire  is  the  only  Government  which  did  not  resort 
to  these  expedients.  The  reason  for  this  is,  that  the  legislative  body 
had  somehow  refrained  from  examining  the  budget  in  detail  (dis- 
turbance on  the  Right),  and  that  it  voted  the  budget  very  quickly." 
(Affirmative  exclamations  on  the  Left.)  (Report  on  the  douziemes 
provisoires  for  1888,  read  from  the  platform  of  the  Senate  by  M. 
Ernest  Boulanger,  December  16,  1887.) 

^  The  matter  of  refusing  to  vote  the  budget  will  be  developed  in 
Chapter  XVIII. 


THE  BUDGET 


Perpetua- 
tion   of    the 
Douzi^mes 


The 

Douzihmes 
Condemned 


either  interior  or  exterior.^  In  1884,  although  the  Minister 
of  Finance  had,  on  February  28,  submitted  his  budget  plan 
for  1885  and  no  serious  incident  had  prevented  its  examina- 
tion, the  Chambers  came  only  at  the  very  end  of  the  year  to 
vote  the  budget  of  revenues.^  The  following  year,  the  depu- 
ties— being  in  a  hurry  to  depart  for  their  respective  electoral 
districts — voted  the  budget  just  before  the  general  elections 
took  place.  (Law  of  August  8,  1885.)  In  1886,  the  newly 
elected  deputies  fell  back  into  the  delays  inaugurated  by  their 
predecessors.  At  the  end  of  1886,  the  budget  for  1887  had 
not  been  voted;  again  at  the  close  of  1887,  the  budget  for 
1888  had  failed  of  enactment.  The  operations  for  both  fiscal 
periods  were  continued  under  the  douzihnes  provisoires. 
More  recently,  the  budget  for  1892  was  voted  only  on  Janu- 
ary 27,  1892,  with  a  dotmeme  provisoire;  the  budget  for 
1893  was  effective  only  on  April  29,  1893,  with  four 
dousiimes  provisoires;  the  budget  for  1895  was  voted  on 
April  16,  1895,  also  with  four  douzi^mes  provisoires.  The 
budget  for  1897  was  enacted  after  three  douzi^mes  provi- 
soires. There  were  three  douzihnes  provisoires  for  the  budget 
for  1898,  five  for  that  of  1899,  which  was  not  voted  till 
May  30,  1899.  There  were  also  four  douzi^mes  provisoires 
for  the  budget  for  1905,  four  for  1906,  one  for  1907.  It  was 
possible  to  avoid  them  entirely  in  the  budget  for  1908.  There 
were  seven  doiizidmes  provisoires  for  191 1 ;  only  two  for  1912. 

The  douziemes  provisoires  are  wholly  the  result  of  parlia- 
mentary disorder. 

Even  in  the  crises,  which  might  have  warranted  forbear- 
ance, the  very  name  of  the  douziemes  provisoires  caused 
unanimous  protest:    "humiliation,"  "shame,"  "disastrous  ex- 

^  "What  the  douziemes  provisoires  prove  is,  that  the  expediting  of 
affairs  is  not  accomplished  in  a  normal  way;  it  means  that  the  public 
powers  when  resorting  to  this  expedient  without  being  compelled  to 
do  so  by  extraordinary  and  imperative  necessities,  have  not  done  all 
they  could  and  should  have  done."  (Senate,  December  26,  1884, 
Speech  of  M.  BufYet.) 

2  The  voting  of  revenues  has  since  preceded  the  voting  of  ex- 
penditures, in  direct  violation  of  the  principles  presented  in  Chapter 
VIII.  Noteworthy  speeches  have  shed  new  light  on  the  defects  of 
the  system  of  the  douzikmes  provisoires.  (Speeches  of  MM.  Buffet 
and  Leon  Say,  Members  of  the  Senate,  December  26,  1884.) 

In  Belgium,  the  system  of  the  douziemes  provisoires  brings  about 
the  same  irregularity  each  year:  the  revenues  are  voted  in  total 
before  December  31,  while  the  voting  of  the  expenditures  occurs  only 
successively  in  the  course  of  the  following  year. 

323 


ANNUAL  VOTING  OF  THE  BUDGETS 

pedient"  were  the  epithets  applied  to  it.  The  ministers,  as 
well  as  the  deputies  reporting  on  the  budgets,  from  the  time 
of  the  beginning  of  the  Restoration,  complained  about  being 
compelled  to  resort  to  that  expedient.^  Nowadays,  when 
'the  Government  feels  the  necessity  of  urging  the  vote  of  one 
or  the  other  Chamber,^  it  merely  suggests — in  a  sense  a  mild 

^  In  1817,  Corvetto,  Minister  of  Finance,  expressed  himself  as  fol- 
lows :  "The  abuse  of  the  douziemes  provisoires  has  been  pointed  out 
to  you;  there  was  some  talk  about  their  irregularity.  This  abuse, 
gentlemen,  this  irregularity  was  pointed  out  to  you  first  by  us.  If 
there  is  anybody  on  whom  this  temporary  arrangement  bears  heavily, 
to  whom  this  temporary  arrangement  is  insupportable,  it  is,  believe 
me,  gentlemen,  the  Minister  of  Finance."  M.  Corvetto  recalled  then 
"the  forceful  circumstances  which  repeated  themselves  always  with 
an  equally  imperative  character."  (Session  of  December  22,  181 7, 
Chamber  of  Deputies.) 

"The  expedient  of  the  douzikmes  provisoires,  once  adopted  in  1816, 
seemed  to  be  entirely  simple  and  so  natural  that  it  was  repeated  in 
succession  in  1817,  1818  and  1819.  .  .  .  The  obligation,  however, 
which  this  expedient  imposes  on  the  Chambers,  to  approve  half  of 
the  taxes  without  examination,  without  any  notion  as  to  their  necessity 
and  as  to  their  destination,  the  obstacles  which  it  puts  in  the  way 
of  every  reform,  of  every  improvement  of  the  financial  system,  caused 
such  sharp  and  such  general  protest,  that  it  was  no  longer  possible 
to  continue  it."  (Report  on  the  bill  relating  to  the  fiscal  year  by 
Deputy  Ganilh,  February  8,  1819.) 

Baron  Louis  himself,  in  1831,  spoke  as  follows:    "These  delays  in 
voting  the  budgets  are  the  most  grave  inconveniences.     They  stop 
every  possible  improvement  of  the  taxation  system;  to  some  extent 
they  make  the  Constitutional  control  of  the  Chambers  over  the  public 
expenditures  an  illusory  one  and  are  at  the  same  time  an  obstacle  to 
the   free  and   regular   course   of   the   administration   of   the   State." 
(Chamber  of  Deputies,  August  18,  1831.)     Submitting  the  General 
Budget  for  1831,  Baron  Louis  said:  "We  dare  not  call  this  law  by  the  , 
name  of  budget.    The  proper  function  of  the  budget  is  to  determine  I 
the  future  and  you  have  already  authorized  the  expenditures  for  the! 
first  ten  months."     (August  29,  1831.) 

2  "The  minister  of  Finance  has  set  forth  two  arguments  in  order 
to  obtain  an  urgent  vote  of  the  Chamber.  He  has  given  us  his 
reasons  and  has  shown  us  a  phantom"  (laughter).  The  Minister 
of  Finance:  "What  kind  of  phantom?"  "The  phantom  of  the  dou- 
ziemes provisoires !  But  as  far  as  I  am  concerned,  I  am  not  afraid  of 
these  phantoms,  M.  Minister"  (another  outburst  of  laughter).  "It 
would  be  necessary  however  to  finish  this  fairy-tale  which  has  been 
invented  by  the  Ministers  and  their  bureaus.  .  .  .  What  a  shame  it  is 
for  the  Chamber — the  people  were  impudent  enough  to  utter  this  word 
repeatedly — yes,  it  has  been  said:  you  are  driving  us  to  the  shame 
of  the  douziemes  provisoires.  ...  It  is  time  that  these  tales  come 
to  an  end:  it  is  time  to  stop  repeating  these  nursery  stories  with 
whiph  the  Chambers  of  the  Mamelukes  of  the  Empire  were  lulled 

329 


THE  BUDGET 


Belgium's 
Experience 


Certain 
Defects 


form  of  threat — the  possibility  of  invoking  the  douziemes  pro- 
visoires} 

It  is  doubtful  whether  in  themselves  the  doiisiemes  pro- 
visoires  really  deserve  such  absolute  condemnation.  Are 
they  not  condemned,  in  the  first  place,  because  they  are  intro- 
duced irregularly  and  hastily,  without  due  consideration  ?  Let 
them  become  a  regular  institution  and  perhaps  we  shall  be  able 
to  appreciate  them.  This  is  what  their  advocates  claim,  basing 
their  contentions  on  the  example  of  foreign  countries;  an 
enthusiastic  supporter  has  gone  so  far  as  to  say :  ''Only  in 
savage  countries,  like  Turkey,  are  doiiziemes  provisoires  un- 
known."    (Chamber  of  Deputies,  Session  of  December  15, 

1887.) 

Votes  on  Account  in  Belgium 

It  must  be  adrnitted  that  certain  countries  live  very  hap- 
pily under  the  regime  of  the  douziemes  provisoires. 

Chapter  IV  has  already  indicated  how,  by  this  means,  Bel- 
gium succeeds  in  bringing  the  date  of  the  preparation  of  the 
budget  closer  to  the  date  of  its  execution.  As  the  result  of 
long  experience,  the  budgetary  procedure  of  Belgium  has 
transformed  the  dotiziimes  provisoires  into  a  normal  institu- 
tion. Our  neighbors  vote  only  the  budget  of  ways  and  means 
before  December  31,  and  also  occasionally  the  budget  of 
non-valeurs  and  of  reimbursements.  Then,  in  the  course  of 
the  fiscal  period,  the  Minister  of  Finance  suggests,  as  a  cus- 
tomary thing  without  objection  or  astonishment,  the  series  of 
douziemes  provisoires  in  order  to  finish  the  discussion  and 
the  vote  on  the  budgets  of  the  various  ministries.  This  dis- 
cussion is  prolonged  during  the  first  months  of  the  year  and 
closes  in  August  or  September. 

This  system,  although  made  regular,  is  still  not  perfect, 
because  the  revenues  are  voted  as  early  as  December  and  the 
expenditures  which  these  revenues  are  designed  to  meet  are 
sanctioned  very  much  later.     In  order  to  maintain  the  equi- 

and  finally,  taken  with  enthusiasm,  they  applauded  the  Government's 
action."  (New  outburst  of  laughter.)  "Well,  I  repeat,  it  is  time 
that  the  jokes  cease  and  I  hope  that  they  are  not  going  to  be  told 
us  again!"  (Chamber  of  Deputies,  Session  of  December  15,  1891.) 
^  A  deputy  who  was  driving  straight  for  the  purpose  he  wanted  to 
achieve,  suggested  the  suspension  of  the  salary  of  the  members  of  the 
legislature  for  as  many  months  as  the  number  of  douziemes  pro- 
visoires they  had  voted.    (Bill  No.  416,  November  27,  1906.) 


ANNUAL  VOTING  OF  THE  BUDGETS 

librium,  it  is  necessary  that  the  Chambers  be  compelled  not 
to  change  the  appropriations  of  the  budget  plan  as  presented 
by  the  ministries,  the  total  of  which  balances  the  resources. 
Possibly  the  Belgian  legislature  appreciates  this  course  of  wis- 
dom and  economy,  which  constitutes  an  unforeseen  advantage 
of  the  system.  But  no  matter  what  the  Belgian  Government 
would  do,  these  piece-meal  budgets  are  not  a  real  budget. 


The  English   System  in  Detail 

Let  us  examine  the  mechanism  of  the  English  system  in 
detail.  The  House  of  Commons  gets  the  budget  plan  through 
the  speech  of  the  Chancellor  of  the  Exchequer,  which  is  some- 
times delivered  at  the  opening  of  the  fiscal  year,  but  more 
often  [shortly]  after  that  date.  The  necessity  of  the  douzi- 
emes  provisoires  results  from  this  simple  statement,  because 
partial  votes  must  obviously  insure  the  continuation  of  the 
operations  beginning  with  April  i.  Some  time  before  the 
speech  of  the  Chancellor  of  the  Excheiiuer  is  delivered,  during 
the  preceding  November  or  December,  the  ^'Estimates"  ^  are 
prepared  by  the  different  branches  of  the  service  and  sub- 
mitted to  the  House  of  Commons  at  the  opening  of  their  an- 
nual session,  usually  in  February. 

The  committees  of  the  whole  House,  of  which  we  have  How  the 
spoken,^  devote  themselves  to  the  study  of  these  estimates.   ^^^JJ^^^J^"^^^ 
These  committees  [of  the  whole  House  sit  at  one  time  as], 
a  committee  on  supply,  [and  later  as]  a  committee  on  ways 
and  means.     The  committee   [of  the  whole]   on  supply  ex- 
amines the    [detailed  estimates  of]    expenditures,  and  after 

^  The  "Estimates,"  or  estimated  budgets  of  the  various  services 
form  three  volumes,  three  distinct  series :  the  Estimates  of  the  Army, 
the  Estimates  of  the  Navy  and  the  Estimates  of  Civil  Services  and 
costs  of  collection.  The  last  one  is  made  out,  as  we  have  seen,  under 
the  direct  authority  of  the  Treasury, .  The  first  two  are  subject  to 
the  control  of  the  Treasury  with  certain  reservations. 

The  volumes  of  the  Estimates  are  absolutely  different  from  the 
volume  of  the  budget  plan  in  France;  they  are  detached  publications, 
without  any  link  between  them,  prepared  by  the  chiefs  of  the  special 
services  which  do  not  act  jointly.  No  volume  at  all  is  devoted  to 
the  revenues.  The  speech  of  the  Chancellor  of  the  Exchequer  alone 
attempts  to  bring  closer  together  these  scattered  elements.  Further- 
more, the  existence  of  the  Consolidated  Fund  must  not  be  lost  from 
sight;  this  fund  withdraws  about  one-quarter  of  the  revenues  and 
one-fifth  of  the  expenditures  from  the  annual  vote  by  Parliament, 

2  See  Chapter  XII. 


Work 


THE  BUDGET 

having  approved  a  sufficient  portion  of  them  [this  committee 
of  the  whole  rises  and]  submits  [its  report]  to  the  Com- 
mons. [Then,  after  the  budget  is  submitted  by  the  Chancel- 
lor, the  whole  House  resolves  itself  into  a]  committee  on 
ways  and  means,  intervenes  for  the  purpose  of  appropriating 
the  funds  necessary  for  the  payment  of  the  voted  appropria- 
tions [the  amount  approved  by  the  whole  House  sitting  as  a 
committee  of  supply].  The  approval  of  the  expenditures  [in 
committee  of  the  whole  House  on  supply]  does  not  provide 
the  means  for  meeting  it  [the  amount  of  the  estimates  voted]. 
The  committee  on  ways  and  means  takes  a  new  vote  on  this 
second  point  [reporting  in  favor  of  appropriating  the  amount]. 
Thus,  two  distinct  operations  are  performed  by  the  commit- 
tees [the  whole  House  first  reviewing  the  estimates  for  ex- 
penditures, then  considering  their  totals  in  the  light  of  the 
proposed  ways  and  means  of  meeting  them] .  The  first  opera- 
tion consists  of  studying  every  item  of  [estimated]  expendi- 
ture [submitted  by  the  Executive]  ;  the  second,  voting  the 
funds  for  meeting  them  [according  to  the  financial  plan  laid 
before  the  House  by  the  Chancellor] .  As  a  high  official  of  the 
English  Treasury  has  explained  to  one  of  his  French  col- 
leagues :  "I  give  my  chief  an  order  [my  approval]  to  buy  this 
or  another  article  on  the  market ;  this  is  the  'supply.'  I  put  a 
shilling  in  his  hand  [and  authorize  him  to  spend  it] — this  is 
the  'ways  and  means.'  "  ^ 
Votes  on  Before  March  31,  that  is  before  [on  the  eve  of]  the  opening 

Accounts  of  the  fiscal  year,  two  votes  on  accounts  will  already  have 
made  the  necessary  appropriations  for  the  departments  of 
the  Army  and  of  the  Navy  for  their  respective  expenditures, 
to  begin  April  i .  A  still  larger  number  of  partial  votes  will 
have  been  taken  for  the  civil  services,  because  of  the  multi- 
plicity of  their  chapters. 

After  April  i,  the  Chancellor  of  the  Exchequer,  having  re- 
capitulated the  total  of  revenues  and  expenditures  in  his  finan- 
cial statement  [the  budget],  the  examination  of  the  remaining 
portions  of  the  budget  [the  estimates  for  expenditure]  goes 
on  in  a  more  active  way  until  August  or  September.  Thus, 
the  "votes  on  accounts"  ^  spread,  as  we  have .  seen,  over  a 

*  Quotation  taken  from  the  report  inserted  in  the  Bulletin  statistique 
des  finances,  June,  1888. 

2  During  the  session  of  the  House  of  Commons  of  May  17,  1888,  the 
procedure  of  the  "votes  on  account"  was  very  sharply  criticized  by 
Messrs.  H.  Fowler  and  O'Connor.    The  Lord  of  the  Treasury,  Mr. 


ANNUAL  VOTING  OF  THE  BUDGETS 

space  of  about  six  months — that  is  to  say,  when  conditions 
are  normal. 

These  are  nothing  but  doimimes  provisoires,^  which  are 
voted  until  the  fiscal  law  is  passed. 

Finally,  the  fiscal  law  is  passed  in  to  to  under  the  name  of  Appropria- 
the  "act  of  appropriation."  This  "act  of  appropriation"  ^  *^°"  ^»^^ 
recapitulates  the  partial  votes  taken  since  the  beginning  of 
the  work  of  the  committees  and  gives  them  the  unity  and  the 
definite  character,  which  up  to  that  time  were  lacking  and 
gives  to  each  appropriation  item  the  form  of  a  budgetary 
chapter,  or  of  a  "vote"  which  relates  specially  to  the  appro- 
priation in  question.  In  a  word  it  [this  succession  of  votes] 
builds  up  the  general  budget  [the  items  which  later  are  passed 
in  the  act  of  appropriation].  The  publication  of  the  general 
budget  is  attended  with  much  solemnity.  The  sovereign  ac- 
cepts "very  joyfully"  either  in  person  or  by  proxy  the  benevo- 

Smith,  himself  acknowledged  that  a  reform  was  becoming  necessary, 
and  a  committee  was  put  in  charge  of  studying  its  bases.  The  ques- 
tion at  issue,  however,  was  only  the  procedure  of  the  votes  on  account 
and  not  their  principle.  As  long  as  the  fiscal  year  begins  on  April 
I  and  as  long  as  the  Chancellor  of  the  Exchequer  continues  to  make 
his  statement  on  about  the  same  date,  the  necessity  for  the  dousicmes 
provisoires  will  exist  and  no  one  can  possibly  contest  their  necessity. 

^  M.  Paul  Leroy-Beaulieu,  in  the  Economiste  frangais  considers, 
with  his  customary  superiority  of  mind,  the  motives  which  justify  the 
system  of  the  douziemes  provisoires  in  England:  "The  thing  which 
permits  the  English  to  be  free  from  suffering  from  the  voting  of  the 
budget  in  the  course  of  the  fiscal  period  itself,  is  the  Ministerial 
authority,  which  in  England  is  integral,  and  the  tradition  of  the 
Chamber  does  not  make  the  latter  take  any  direct  initiative  in  budget- 
ary questions.  As  there  is  no  question  every  year  in  the  House  of 
Commons  to  upset  everything,  the  taxes  and  the  public  services,  and 
as  the  Minister  of  Finance  is  pretty  nearly  sure,  unless  his  suggestions 
be  absolutely  contrary  to  national  sentiment,  not  to  be  exposed  to 
attack  from  a  teasing  opposition  of  a  number  of  improvised  reformers, 
there  are  in  England  many  less  inconveniences  than  in  France 
with  regard  to  the  budget  not  being  voted  before  the  beginning 
of  the  fiscal  period.  In  France,  on  the  contrary,  where  everything 
depends  upon  the  always  unforseen  votes  of  undisciplined  groups, 
the  establishing  of  the  budget  in  the  course  of  the  fiscal  period  ex- 
poses the  entire  administration  to  the  danger  of  a  most  regrettable 
confusion."     (Economiste  frangais,  January  14,  1888.) 

2  The  word  "appropriation"  signifies  the  allotment  of  funds  to  every 
vote  or  budgetary  subdivision.  Until  the  bill  of  appropriation  is 
passed,  the  "votes  on  account"  are  composed  only  of  partial  appro- 
priations authorized  en  bloc.  The  appropriation  bill  classifies  these 
appropriations  in  their  respective  subdivisions  by  recapitulating  them. 

333 


THE  BUDGET 


Recapitula- 
tion 


Annuality 
of  the 
Budget 


lence  which  his  loyal  subjects  have  voted.  All  this  is  expressed 
in  sacrosanct  phrases  taken  from  the  French. 

This  regular  institution  of  the  dotim^mes  provisoires,  ap- 
plied in  countries  as  well  administered  as  England  and  Bel- 
gium,^ merits  attention.-  The  day  when  the  dousiemes  provi- 
soires, improved  and  regulated,  shall  occupy  a  legitimate  place 
in  our  accounting  systems  [plan  of  accountability  to  the  repre- 
sentatives of  the  people],  they  will  cease  to  deserve  the  just 
and  universal  reproach  of  which  they  [in  France]  are  now- 
adays the  subject.  This,  as  may  be  remembered,  was  the 
conclusion  of  Chapter  IV. 

Recapitulating  the  above:  a  budget  voted  in  toto  for  sev- 
eral years  is  rare,  and  very  few  countries  furnish  examples 
of  it;  it  is  also  exceptional  where  certain  portions  of  budgets 
are  voted  for  more  than  one  year;  and  in  cases  where 
douziemes  provisoires  covering  less  than  a  year  are  voted,  a 
recapitulation  of  revenues  and  expenditures  reestablishes  the 
annual  budget  in  its  totality.  We  can,  therefore,  continue  to 
affirm  in  a  general  way,  in  spite  of  the  exceptions  pointed  out 
in  this  chapter,  that  the  budget,  by  its  very  nature,  must  be 
annual. 

In  France,  no  law  prescribes  this,  annuality  of  the  budget. 
In  the  absence  of  a  law,  a  decree  of  regulation  of  May  31, 
1862,  stipulated:  "The  public  revenues  and  expenditures  to 
be  authorized  for  each  fiscal  period  shall  be  enacted  by  annual 
fiscal  law."  (Article  30.)  Moreover,  the  fiscal  laws  since 
1877  have  not  failed  to  mention  and  to  repeat  in  the  final  ar- 
ticles that  the  authorizations  of  the  revenues  and  of  the  ex- 
penditures are  granted  exclusively  only  for  the  year  named  in 

1  "The  nations  with  which  the  examination  of  the  budget  forms  the 
subject  of  a  profound  discussion,  have  regulated  the  usage  of 
temporary  appropriations  and  have  established  a  normal  practice  of 
such  temporary  appropriations.  ...  It  is  considered  that  these 
temporary  appropriations  are  worth  much  more  than  the  urgent  and 
hasty  voting  of  budgets  on  the  very  eve  of  the  opening  of  the  fiscal 
period.  We  see  that  with  nations  which  are  justly  reputed  to  have 
regulated  financial  conditions,  the  douciemes  provisoires  do  not  have 
the  character  which  is  attributed  to  them  in  France."  (Report  of 
the  Commission  on  Budget,  relating  to  the  douziemes  provisoires  for 
1888  by  Deputy  Yves  Guyot,  December  15,  1887.) 

2  In  Italy  the  douziemes  proznsoires  acquire  the  same  character  as 
in  France.  They  have  often  been  put  in  practice,  particularly  in 
1886-1887,  in  which  year  the  temporary  arrangement  lasted  for  almost 
eight  months,  the  budget  for  1886- 1887  having  been  voted  only  on 
February  19,  1887,  although  the  fiscal  period  began  on  July  i, 

334 


ANNUAL  VOTING  OF  THE  BUDGETS 

the  budget  [the  fiscal  law].  Thus,  the  annuality  of  the  budget 
is  expressly  confirmed  ;^  we  repeat,  however,  that  this  annuality 
is  not  prescribed  by  any  special  law  or  by  our  Constitution. 
An  authority  on  this  subject^  has  recently  written: 

''The  principle  of  the  annual  voting  of  the  budget  is 
not  entered  in  the  Constitutional  Laws  of  1875 ;  is  this 
a  reason  why  it  should  not  be  taken  into  account?  You 
do  not  think  so,  and  neither  do  L  The  principle  of  uni- 
versal suffrage  also  is  not  mentioned  in  these  laws  and 
still  it  forms  the  basis  of  the  public  powers.  The  annual 
voting  of  the  budget  is  sanctioned  by  our  accounting 
laws  [our  laws  of  accountability].  Since  the  Revolution 
of  1789,  it  has  formed  an  essential  part  of  our  Parlia- 
mentary establishment." 

^  See,  however,  in  Chapter  XXVI  the  innovation  of  the  law  of 
February  27,  1912,  which  authorizes  in  certain  cases  the  carrying 
forward  of  appropriations  voted  for  one  fiscal  period  to  subsequent 
fiscal  periods. 

-  Letter  of  M.  H.  Wallon  of  May  15,  1889. 


335 


CHAPTER  XVI 

ADDITIONAL  APPROPRIATIONS.  MEASURES 
TAKEN  AGAINST  THEM.  CORRECTIVE  BUDG- 
ETS.    TRANSFERS 

Perils:  Additional  Appropriations:  Emergencies  Require  Extraordi- 
nary Appropriations;  Short-sightedness  a  Cause;  Lurking  Dan- 
gers; Discouraging  Results. 

Measures  to  Curb  Additional  Appropriations:  An  Ineflfective 
Formula;  The  Law  Amended  in  1851 ;  Its  Failure;  Still  Another 
Palliative;  Other  Measures. 

Corrective  Budgets:  Corrective  Budget  Defined;  Advantages  of 
the  Corrective  Budget;  Experience  in  Italy;  Budgets  Contrasted; 
Objections  to  the  Corrective  Budget;  Effects. 

Transfers  of  Appropriations:  The  Scheme  of  Transfers;  Two 
Kinds  of  Transfers;  Dangers  of  the  Transfer  Scheme;  A  Final 
Case. 

Perils 

Unforeseen  events  occur  too  frequently  in  human  affairs 
to  make  it  possible  to  insure  against  departure  from  the  origi- 
nal calculations  upon  which  finance  measures  are  based.  Re- 
gardless of  the  date  of  the  preparation  of  the  budget,  and 
no  matter  how  closely  it  precedes  the  actual  facts  [the  execu- 
tion], there  will  always  be  departures  from  the  most  care- 
fully prepared  estimates  of  revenues  and  expenditures.  With- 
out speaking  in  this  connection  either  of  the  revenues  or  of 
possible  reductions  in  expenditures,  we  shall  consider  at  this 
time  only  the  increases  in  expenditures  made  subsequent  to 
the  voting — that  is,  we  shall  devote  this  chapter  to  additional 
appropriations. 

Additional  Appropriations 

Let  us  begin  with  a  definition  of  what  is  meant  by  addi- 
tional appropriations :  "Additional  appropriations  are  budget- 
ary allowances  granted  ^  after  the  annual  fiscal  law  has  been 

^  Strictly  speaking,  it  should  be  said  granted  by  the  legislature. 
But  as  in  certain  exceptional  cases  the  Government  itself  makes  the 
additional  appropriations,  it  seems  preferable  to  leave  the  word 
granted  without  further  specification. 


ADDITIONAL  APPROPRIATIONS 

passed."     The  views  expressed  in  the  two  chapters  which 

follow  will  serve  to  justify  this  definition. 

• 
"It  is  a  chimera  to  pretend  to  abolish  absolutely  addi-  Emergen- 
tional  appropriations,"  said  the  deputy  reporting  on  the  qufre^Ex- 
budget  for  1871.     'There  will  always  be  public  expendi-  traordinary 
tures  which  will  exceed  budget  estimates,  no  matter  how  Appropria- 
high,  and  leave  a  deficit.    There  will  always  be,  either  in 
the  interior  or  abroad,  some  unforeseen  circumstances 
which  cannot  be  anticipated  and  which  will  require  the 
use  of  sums  exceeding  the  resources  of  the  budget." 
(Report  on  supplementary  appropriations  for  the  fiscal 
period  1871,  by  M.  Casimir  Perier,  August  31,  1871.) 

Fortunately,  unforeseen  events  do  not  always  assume  such 
terrible  form  as  those  of  the  year  1871,  the  date  of  the  above 
document.  In  normal  times  the  really  unforeseen  events  for 
which  supplementary  funds  must  be  immediately  provided  are, 
after  all,  rather  infrequent.  We  may  cite,  exempli  gratia,  the 
burning  of  the  Opera-Comique,  the  rebuilding  of  which  was 
the  cause  of  an  immediate  appropriation  of  500,000  francs. 
(Law  of  July  27,  1887.)  Previously,  the  law  of  June  29 
had  allotted  200,000  francs  to  the  victims  of  that  disaster; 
then  came  the  incident  of  the  hurried  mobilization,  which  re- 
quired an  additional  allowance  of  7,100,000  francs  (Law  of 
July  29,  1889) ;  the  costs  of  the  receptions  to  the  Moroccan 
embassy,  to  the  Sultan  of  Tadjourah  in  1883,  to  the  Russian 
squadron  in  1893,  to  the  King  of  Spain  in  1905;  the  funerals 
of  Field  Marshal  MacMahon  in  1893  and  of  President  Carnot 
in  1895;  damages  paid  to  victims  of  the  bursting  of  the  dam 
of  Bouzey  in  1895,  amounting  to  5,200,000  francs;  the  ex- 
penses of  representation  of  the  French' embassy  at  the  corona- 
tion of  Tsar  Nicholas  II  in  Moscow  in  1896;  the  costs  of  the 
Fashoda  expedition,  reaching  59,229,000  francs ;  the  establish- 
ment of  new  diplomatic  posts  on  account  of  the  separation  of 
Sweden  and  Norway  in  1905,  etc.  This  list,  however,  if  only 
really  exceptional  and  urgent  cases  are  included  in  it,  will 
never  become  very  long.  Even  if  the  list  were  made  complete, 
its  total  would  still  be  relatively  unimportant.^ 

Let  us  approach  the  matter  frankly  from  a  general  point 

^  As  unforeseen  events  are  certain,  the  question  arises  why  a  special 
appropriation  does  not  provide  for  them  in  every  original  budget? 

337 


Short- 
sighted- 
ness a 
Cause 


THE  BUDGET 

of  view.  Unfortunately,  closely  related  to  unforeseen  events 
is  shortsightedness,  a  shortsightedness  either  intentional  or 
resiilting  from  unpardonable  delays  and  omissions — thus  cre- 
ating improper  additional  appropriations  which,  we  repeat, 
are  too  habitual  and  too  important — on  the  one  hand  upset- 
ting the  budget  equilibrium  and  on  the  other  favoring  in- 
creases in  expenditures  [beyond  what  would  have  been  ap- 
proved, if  they  had  been  included  in  the  estimates]. 

It  is  easy  to  grasp  the  significance  of  the  first  objection. 
The  equilibrium  (which  those  who  prepared  the  budget  have 
labored,  much  to  their  credit,  sincerely  to  establish)  is  de- 
stroyed by  the  debits  of  the  unforeseen  supplements — there 
being  nothing  put  on  the  scales  to  counterbalance  them. 

"No  serious  budgetary  estimate  is  possible,  with  a  tide 
of  additional  expenditures  running  high;  all  foresight 
fails  and  control  becomes  iriefifective."  (Report  of  the 
commission  on  finances  of  the  Senate,  July  24,  1885.) 
"Budgetary  shortsightedness  causes  great  and  serious  in- 
convenience; it  destroys  the  unity  of  the  budget.'* 
(Speech  of  the  senator  reporting  on  the  subject  to  the 
Senate,  July  10,  1890.) 


Lurking 
Dangers 


Further,  the  more  or  less  certain  contingency  of  additional 
appropriations  discourages  those  who  prepare  the  budget;  it 
renders  their  work  and  their  struggle  for  an  equilibrium  in- 
efficacious and  delusive.  There  is  no  budget,  not  even  in  the 
stage  of  preparation,  if  the  voted  appropriations  fail  to  con- 
stitute the  impassable  limit,  as  they  should,  for  the  operations 
of  the  fiscal  period. 

We  have  also  said  that  in  the  second  place  additional  appro- 
priations favor  the  increase  of  expenditures  [beyond  what 
would  have  l>een  allowed  if  included  in  the  original  estimates], 
because  nothing  is  more  difficult  to  resist  than  the  impulse 
toward  expenditiires,  useful  or  quasi-useful,  when  the  necessity 
for  maintaining  the  equilibrium  is  no  longer  a  restraint.  When 
the  budget  is  elalx)rated  [requests  for],  the  appropriations 
must  undergo  competitive  examination  as  to  their  merits. 
Then  those  only  which  are  highly  approved  are  admitted  as 
being  within  the  range  of  financial  possibility.  But  once  the 
budget  has  been  voted,  the  [additional]  appropriations  must 
pass  only  a  simple  examination  to  which  those  most  highly 
recommended  are  admitted  at  once.     Instead,  therefore^  of  a 

338 


ADDITIONAL  APPROPRIATIONS 

judicious  selection  eliminating  the  expenditures  of  secondary 
or  doubtful  character,  all  may  slip  through  because  the  legis- 
lature is  not  able  to  oppose  to  any  of  them  the  invincible  argu- 
ment— non  possumiis. 

The  administrations,  well  aware  of  this  fact,  carry  over  to  Discourag- 
this  period  their  most  vulnerable  demands,  because  they  know   *"^  Results 
the  judges  are  then  less  severe,  less  well  prepared  for  resist- 
ance and  less  well  armed  for  the  defense  of  the  Treasury. 

Thus,  additional  appropriations,  by  destroying  the  original 
equilibrium  and  favoring  the  increase  of  expenditures,  force 
the  prepared  budgets  into  a  deficit,  notwithstanding  the  fact 
that  they  were  originally  voted  with  a  surplus  of  revenues. 
Examples  are,  unfortunately,  only  too  numerous. 


Measures  to  Curb  Additional  Appropriations 


An   IneflFec- 

tive 

Formula 


These  abuses,  which  speakers  and  writers  on  financial  topics 
have  assailed  from  the  beginning  of  the  last  century,  have 
been  combated  in  various  ways : 

First,  as  a  palliative,  the  law  of  July  i8,  1836,  contains 
the  following  very  reasonable  provision,  which  unhappily  was 
never  carried  out:  'Tn  the  future,  every  demand  for  appro- 
priations outside  of  the  annual  law  of  expenditures,  shall  in- 
dicate the  ways  and  means  provided  to  meet  the  demanded 
appropriations."  (Article  5,  of  the  law  of  July  18,  1836, 
determining  the  budget  for  1837.)  Since  additional  appro- 
priations have  the  inconvenient  way  of  presenting  themselves, 
isolated,  with  no  corresponding  resources',  and  outside  of  the 
budgetary  balance,  the  law  above  cited,  in  order  to  remedy 
the  defect,  formulated  the  idea  of  demanding  the  designation 
of  a  special  resource  to  satisfy  the  appropriation  asked  for. 
Unfortunately,  the  carrying  out  of  this  provision  resulted  only 
in  the  inserting  of  this  commonplace  formula,  which  the  bills 
for  additional  appropriations  still  repeat:  'The  expenditure 
shall  be  met  by  means  of  resources  corresponding  to  the  needs 
of  the  fiscal  period." 

The  law  of  1836,  having  thus  become  a  dead  letter,  it  was 
thought  possible,  in  1851,  to  restore  its  vitality  by  a  change 
of  the  formula:      Every  demand  for  supplementary  appro-  The  Law 
priations  shall  henceforth  contain  the  precise  statement  as  to  ^^^^^^^  i" 
the  ways  and  means  allotted  for  the  payment  of  the  expendi-   '  ^' 
ture.     The  authors  of  the  suggestion  assumed  that  the  neces- 

339 


THE  BUDGET 

sity  for  a  precise  statement  would  impose  an  obstacle,  unsur- 
mountable  for  the  time  being,  to  the  destruction  of  the  equi- 
librium.   But  at  the  time  of  the  public  discussion  the  speakers 
inquired  what  the  word  precise  really  meant,  and  what  the 
limit  would  be  to  this  precision.    Shall  it  be  necessary,  in  order 
to  be  absolutely  precise,  to  establish  a  new  tax  for  each  sup- 
plementary expenditure,  a  procedure  which,  in  a  majority  of 
cases,  would  become  superfluous,  because  of  a  normally  in- 
creasing growth  of  revenues?    In  brief,  the  Assembly,  while 
rendering  the  word  ineffective,  contented  itself  with  repro- 
ducing, in  different  terms,  the  idea  of  the  law  of  1836:  "The 
plan  contains  the  indicated  ways  and  means  to  be  used  to  meet 
Its  Failure     the  payment  of  the  expenditure.    If  the  expenditure  cannot  be 
met  with  funds  from  the  resources,  accruing  from  the  fiscal 
period,  the  plan  suggests  that  the  appropriation  be  charged 
^-'^   against  the  floating  debt."     (Law  of  May  16,  1851,  Article 
3.)     This  last  phrase  showed  a  very  easy  way  to  assign  a 
charge  to  the  additional  expenditures,  and  as  a  result  thereof 
abuses  immediately  manifested  themselves.     Since  then,  the 
/following  fomiula  has  become  popular:     "The  expenditure 
(    shall  be  met  by  resources  resulting  from  the  floating  debt."  ^ 
'    This  is  all  that  was  left  of  the  provisions  of  the  laws  of  July 
18,  1836,  and  May  16,  185 1. 

The  statements  of  ministers  and  of  legislatures,  however, 
continued  to  deplore  the  extension  of  the  supplementary  ap- 
propriations; they  are  the  plague  of  our  budgets — declared 
M.  Dupin,  under  the  July  Monarchy. 
Still  In   1849,   another  palliative  was  introduced;  in  order  to 

PalUadvc       bring  some  light  into  the  chaos  of  demands  for  additional 
appropriations,  the  following  suggestion  ^  was  made : 

"A  table,  showing  the  appropriations  charged  suc- 
cessively against  the  resources  of  the  two  budgets  in  the 
course  of  the  execution,  shall  be  drawn,  kept  up-to-date 
in  accordance  with  documents  transmitted  to  the  National 
Assembly  by  the  Minister  of  Finance  and  placed  in  public 
view  in  the  meeting  chamber  of  the  commissions  on 
finances  and  in  the  bureaus.'*  (Law  of  November  18, 
1849,  Article  i.) 

1  The  following  formula  is  often  substituted :  "These  appropria- 
tions shall  be  provided  for  by  means  of  the  general  resources  of  the 
ordinary  budget  of  the  current  fiscal  period." 

2  Suggestion  made  by  M.  Darblay,  Sr. 


ADDITIONAL  APPROPRIATIONS 

Since  it  has  not  been  abrogated,  this  law  still  remains  in  force. 
But  one  would  now  vainly  search  the  rooms  of  the  legislative 
building  in  an  attempt  to  discover  the  table  of  supplementary; 
appropriations. 

Following  this  sequence  of  ideas,  the  commission  on  budget 
for  1876  obtained,  through  the  initiative  of  deputy  Guichard, 
from  the  Minister  of  Finance  the  concession  that  among 
the  annexes  to  the  additional  appropriation  bills  should  be  en- 
tered a  summary  of  supplements  already  voted,  together  with 
a  statement  on  the  fiscal  periods  in  the  course  of  execution. 
This  rule,  although  not  sanctioned  by  law,  still  remains  in 
force. 

It  would  be  simpler  to  publish  monthly  in  the  Journal  oificiel 
an  up-to-date  table  of  supplementary  appropriations.     This 
would  be  a  periodical  publication,  which  would  inform  the 
public  and  the  Chambers  much  more  regularly  and  accurately 
than  can  annexed  schedules  attached  to  bills,  the  contents  of    1 
which  many  deputies  lack  the  time  to  read  and  which  always    | 
remain  practically  ignored  by  the  public.     This  would  be  the  . 
first  step  towards  the  publication  in  the  Journal  offidel  of  the 
progress  of  public  expenditures,  correlatively  with  the  progress 
of  collections,  as  is  the  case  in  England. 

At  the  same  time,  a  law  of  August  12,  1876,  stipulated  still  Other 
another  palliative,  that  bills  for  additional  appropriations  ^^^s"*"^* 
could  be  submitted  but  once  a  month.  Until  then,  these  bills 
accumulated  without  order  or  method.  Henceforth,  the  Min- 
ister of  Finance  was  supposed  to  keep  them  in  his  portfolio 
and  combine  them  into  a  single  monthly  bill ;  ^  thus,  at  least, 
the  form  was  improved  :  "The  Minister  of  Finance  shall  com- 
bine into  a  single  bill  all  the  demands  for  supplementary  or 
extraordinary  appropriations,  the  need  for  which  has  made 
itself  felt  in  the  branches  of  the  service  during  the  month." 
(The  only  article  or  the  law  of  August  12,  1876.) 

We  might  still  mention  in  this  connection  the  obligation 
on  the  part  of  the  Minister  of  Finance  to  countersign  jointly 
with  the  competent  ministers  the  bills  for  additional  appropria- 
tions and  to  submit  them  himself  to  the  Chambers.  (Law  of 
May  16,  1851.) 

Until  now,  we  have  seen  the  public. powers  struggle  against 
the  rising  tide  of  additional  appropriations  only  by  means  of 

^  The  next  train,  according  to  the  expression  used  by  the  bureaus 
and  recalled  by  M.  Raymond  Poincare,  in  the  course  of  the  discussion 
on  the  budget  for  1908. 


THE  BUDGET 

superficial  proceedings,  tending  only  to  introduce  order  and 
clearness  in  the  operations,  without,  however,  attacking  the 
evil  at  its  roots. 

Corrective  Budgets 


Corrective 

Budget 

Defined 


Advantages 
of  the 
Corrective 
Budget 


Other  measures  of  greater  importance  have  been  tried  out, 
.  particularly  the  two  which  follow :     ( i )   The  institution  of 
•    corrective  budgets;  (2)  the  institution  of  transfers. 

The  decree  of  May  31,  1862,  declared  with  regard  to  cor- 
rective budgets :  "Article  32.  The  budget  can  be  corrected,  if 
necessary,  in  the  course  of  the  fiscal  period" — a  provision  now 
void  (but  only  as  to  its  application,  because  no  subsequent 
law  appears  to  have  abrogated  it).  As  this  text  has  failed 
to  furnish  a  definition  of  the  corrective  budget,  we  may  adopt 
r~the  following:  "The  corrective  budget  is  a  second  budget, 
I  which  changes,  if  necessary,  in  the  course  of  the  fiscal  period, 
the  estimates  and  the  authorizations  contained  in  the  annual 
fiscal  law." 

Two  essentials  result.  First,  the  corrective  budget  is  a 
budget.  It  must,  therefore,  estimate  and  anticipate — in  con- 
formity with  budgetary  rules — the  revenues  and  the  expendi- 
tures; or,  in  other  words,  it  must  establish  the  equilibrium. 
Furthermore,  it  constitutes  a  second  budget.  As  a  result,  it 
becomes  a  definite  substitute  for  the  original  fiscal  law,  passed 
before  the  opening  of  the  fiscal  period.  These  are  its  essen- 
tial characteristics.  Let  us  study,  first,  its  operation  in 
France. 

Corrective  budgets,  although  authorized  in  principle  by  the 
.  Constitution  of  1852,  were  introduced  permanently  into  our 
budgetary  system  only  in  1863,  as  the  result  of  applying  the 
Senatus-Cofisnlte  of  December  31,  1861.  Until  the  last  years 
of  the  Empire,  that  is,  for  seven  years,  a  second  budget  was 
regularly  submitted,  discussed  and  voted  in  tne  course  of  the 
fiscal  period,  in  order  to  correct  the  figures  of  the  original 
revenues  and  expenditures  and  to  reestablish  the  equilibrium, 
if  events  had  upset  it,  after  the  fiscal  law  has  been  passed. 

Usually,  the  corrective  budget  appeared  coincident  with  the 
budget  plan  for  the  succeeding  fiscal  period,  that  is,  during 
the  early  months  of  the  year.  The  date  was  obviously  fa- 
vorable for  an  exact  revision  of  the  estimates  of  revenues  and 
of  expenditures,  made  thus  in  the  presence  of  the  facts  them- 
. selves.     This  shows  the  advantage  of  a  belated  voting  of  the 

342 


ADDITIONAL  APPROPRIATIONS 

budgets,  of  the  doiiziemes  provisoires  and  of  the  English  sys- 
tem, as  already  explained. 

"By  means  of  this  revision  of  the  state  budget — 
analogous  to  the  one  which  for  a  long  time  has  fortu- 
nately been  made  in  municipal  administrations — the  con- 
tingencies at  the  end  of  the  year  can  be  considerably  re- 
duced." (Speech  of  M.  Vuitry,  Government  Commis- 
sary, May  9,  1864,  on  the  subject  of  corrective  budgets.) 
Further  on,  the  same  speaker  added :  "What  is  the  ad- 
vantage of  corrective  budgets?  The  advantage  is  that 
while  you  revise  the  expenditures  you  revise  at  the  same 
time  the  revenues;  thus,  the  double  point  of  view  of  the 
revenues  and  of  the  expenditures  no  longer  escapes  the 
attention  of  anybody.  Not  a  step  outside  of  the  original 
budget  can  be  taken  without  considering  the  financial  pos- 
sibilities along  with  the  usefulness  of  the  expenditure." 

This  last  passage  explains  the  way  in  which  the  corrective 
budgets,  by  their  construction,  put  an  effective  check  on  the 
abuse  of  additional  appropriations.  They  compel  the  Govern- 
ment and  the  Chambers  to  specify  the  resources  by  means  of 
which  the  supplementary  expenditures  shall  be  met.  The 
necessity  of  budgetary  equilibrium  prevents  the  additional  ap- 
propriations from  exceeding  the  level  of  revenues,  which  are 
intended  to  restrain  them:  this  is  what  the  palliatives  men- 
tioned above  attempted  in  vain  to  put  into  practice.  Thus, 
the  corrective  budget  is  called  in  Italy  the  budget  of  definite 
estimating,  which  means  that  nothing  unforeseen  can  happen 
after  this  budget  is  passed.  For  the  same  reason  corrective 
budgets  work  with  much  success  in  the  organization  of  the 
finances  of  the  departements  and  of  municipalities. 

The  Italian  accounting  law  of  1883 — codified  on  February  Experience 
17,  1884 — specifies  in  Article  2y  that,  in  November  of  each  '"  ^^^'^ 
year  (that  is,  in  the  middle  of  the  fiscal  year,  which  begins 
in  July),  the  Minister  of  the  Treasury  shall  submit  the  cor- 
rective bill  for  the  current  fiscal  period.  This  corrective  bill 
is  a  printed  bill  submitted  to  the  legislature,  together  with  the 
budget  plan  for  the  ensuing  fiscal  period.  Each  year,  there- 
fore, in  November  or  December,  the  Minister  of  the  Treasury 
submits  a  corrective  statement,  which  changes  the  original 
figures  of  revenues  and  of  expenditures  for  the  current  fiscal 
period  in  conformity  with  the  results  which  have  been  ob- 

343 


THE  BUDGET 


Budgets 
Contrasted 


Objections 
to  the 
Corrective 
Budget 


tained  or  which  are  anticipated.  For  the  fiscal  period  1904- 
1905,  for  example,  the  restorer  of  the  Italian  finances,  M. 
Luzzatti,  on  December  8,  1904,  anticipated  a  definite  surplus 
of  from  10  to  15,000,000  lire  in  revenue,  "without  artificially 
increasing  the  estimates,"  as  he  said;  this  surplus  was  al>- 
sorbed,  however,  and  even  exceeded  by  new  expenditures.^ 
For  the  fiscal  period  1907-1908,  M.  Carcano,  Minister  of  the 
Treasury,  on  December  7,  1907,  definitely  established  the 
probable  surplus  at  54,500,000  lire.  For  1911-1912,  M. 
Tedesco,  about  the  same  time,  while  presenting  the  budget  for 
1912-1913,  corrected  the  current  budget  and  brought  its  sur- 
plus to  23,000,000  lire. 

In  the  month  of  December,  as  a  rule,  the  original  budget 
for  the  coming  fiscal  period  is  submitted  to  the  chambers 
along  with  the  pro  jet  de  reglement  of  the  fiscal  period,  which 
closed  on  the  preceding  30th  of  June  [the  bill  to  give  regu- 
larity to  deficiencies].  It  is  interesting  to  note  the  various 
degrees  of  accuracy  that  obtain  in  these  three  documents 
drafted  at  the  same  time.  The  original  budget  for  the  future 
fiscal  period,  anticipating  results  far  in  advance,  can  give  to 
its  figures  only  indefiniteness.  The  corrective  budget,  on  the 
contrary,  becomes  affirmative,  because  it  works  in  the  fiscal 
period,  in  the  presence  of  facts.  As  far  as  the  loi  de  regle- 
ment of  the  expired  fiscal  period  is  concerned,  it  contains  only 
irrefutable  and  definite  elements,  which  need  not  again  be 
taken  up.  Since  Italian  finances  have  been  reestablished  on  a 
sound  basis,  a  comparison  of  these  three  phases  of  one  and 
the  same  budget  no  longer  proves  a  chapter  of  disappoint- 
ments. On  the  contrary,  the  solvency  of  the  budgets  is  now 
confirmed  with  certainty  at  every  stage.  In  the  past,  the  cor- 
rective budgets  did  not  guard  Italy  against  an  upset  equi- 
librium of  the  budget,  but  it  is  highly  probable  that  they  helped 
toward  the  present  happy  state. 

Although  corrective  budgets  present  real  advantages,  there 
are  also  certain  objections  to  them.  The  first  of  these  is  the 
duality  of  tHe  budgets.  An  original  budget  plus  a  corrective 
budget  makes  two  budgets.     Thus,  as  soon  as  a  budget  loses 


,  ^  "It  is  proper  to  call  the  attention  of  the  Chamber  to  the  decrease 
of  surpluses  which  have  fallen  from  69  to  34,  from  34  to  15  and  from 
1 15  to  10,000,000,  and  which  are  not  used  for  the  relief  of  the  tax- 
payers nor  for  the  payment  of  the  debts  of  the  Treasury,  but  for  new 
expenditures  which  were  not  always  indispensable."  (Statement  of 
M.  Luzzatti,  Minister  of  the  Treasury,  December  8,  1904.) 


344 


ADDITIONAL  APPROPRIATIONS 

its  unity,  a  rivalry  is  established  within  its  double  personality. 
One  personality  becomes  preponderant  at  the  expense  of  the 
other.  The  original  budget  is  the  one  sacrificed  because  it  is 
the  older,  and  interest  is  necessarily  concentrated  upon  its  suc- 
cessor, a  newcomer,  the  figures  of  which  have  a  quasi-definite 
character.  The  original  fiscal  law  with  its  temporary  figures 
receives  only  a  formal  vote.  When  the  corrective  budgets 
were  in  force  in  France,  the  expenditures  were  really  deter- 
mined only  in  the  course  of  the  fiscal  period,  after  the  bulk 
of  them  had  been  incurred. 

"You  make  us  vote  a  corrective  budget,  which  is  very 
complicated  and  hard  to  understand.  We  think  we  make 
appropriations  and  discuss  them  before  they  are  used. 
But  this  is  not  the  case.  We  discuss  most  tranquilly 
amounts  expended  long  ago."  (Speech  of  Deputy  Mag- 
nin,  June  29,  1868.) 

In  the  same  way  in  Italy  the  corrective  budgets  monopolize 
public  attention.  When,  in  the  month  of  November,  the  Min- 
ister of  the  Treasury  traces,  in  his  corrective  budget,  the 
definite  outlines  of  the  current  fiscal  period,  his  figures  are 
accepted  as  relatively  correct;  and  of  a  truth  they  are  far 
nearer  finality  than  the  estimates  formulated  a  year  ago  in 
the  original  budget.  The  corrective  budgets  give  precise  fig-  EflFects 
ures,  in  which  confidence  can  be  placed.  The  original  budgets, 
on  the  contrary,  contained  vague  phrases.  "The  patient  has 
entered  upon  the  stage  of  convalescence;  but  improvement  is 
slow  and  rest  as  well  as  continuous  attention  is  needed,  so 
that  he  may  regain  his  strength."  (Statement  of  Sonnino, 
relating  to  the  original  budget  for  1896- 1897.) 

Thus,  the  good  budget  drives  out  the  other,  to  apply  the 
Gresham  Law  reversed.  The  main  thing  is  to  know  whether 
the  original  or  the  corrective  budget  shall  be  sacrificed.  If 
France  would   frankly  resume  the  tradition  ^   of  corrective 

^  The  corrective  budgets  have  been  discontinued  in  France  as  a 
regular  and  permanent  measure  since  1870.  In  1871,  however,  the 
gravity  of  the  events  justified  an  important  corrective  budget.  (Law 
of  September  16,  1871,  which  established  a  corrective  budget  for 
1871.) 

The  budget  plans  are  often  corrected  in  the  course  of  preparation. 
The  first  plan  is  succeeded  by  a  second,  then  by  a  third  with  the 
changes  in  the  incumbency  of  the  Ministry  of  Finance.     In  1887 

349 


THE  BUDGET 

budgets,  and  would  restore  Article  32  of  the  decree  of  May  31, 
1862,  and  give  it  full  force,  it  would  introduce  no  innovation 
into  the  existing  condition  of  things  by  sacrificing  the  original 
budget.  France  would  have  a  chance  to  see  its  revenues  and 
its  expenditures  displayed  with  greater  certainty  than  at 
present. 

.  Transfers  of  Appropriations 

Another  formal  procedure,  that  of  transfers,  was  invoked 
to  combat  the  increase  of  additional  appropriations  under  the 
Second  Empire. 

The  Senahis-Consulte  of  March  31,  1861 — having  put  to 
the  forefront  of  its  reform  program  the  principle  that  sup- 
plementary and  extraordinary  appropriations  should  no  longer 
be  made  except  by  the  legislature  by  virtue  of  law — added  the 
following  correction :  ^'Article  2.  Special  decrees  issued  by 
the  Council  of  State  can  authorize  transfers  from  one  chapter 
to  another,^  within  the  budget  of  each  ministry." 

Owing  to  the  combination  of  these  two  measures — one  re- 
quiring the  authorization  by  the  legislature  for  each  supple- 
The  mentary  appropriation,  and  the  other  providing  means   for 

Scheme  of  the  transfer  of  funds  by  the  executive  power — the  Minister 
Transfers  ^£  Finance,  then  in  office,  M.  Fould,  believed  there  would  be 
K  no  more  supplementary  appropriations  and  that  order  would 
automatically  be  restored.  He  read  a  memorandum  to  the 
council  of  ministers  on  November  12,  1861,^  to  the  effect  that 
a  marvelous  discovery  had  been  made  which,  with  certainty, 
would  benefit  the  country.     **I  am  looking   for  objections 

these  revisions  of  the  budget  plans,  one  after  the  other,  caused  M. 
Paul  Leroy-Beaulieu  to  write  in  the  Economistc  frangais  a  biting 
article  under  the  title:  'The  Fifth  Budget  Plan  for  the  Fiscal  Period 
1887."  (Issue  of  January  15,  1887.)  These  corrected  budget  plans, 
however,  are  not  corrective  budgets.  Since  1871  there  have  been 
no  corrective  budgets  in  France. 

'  As  the  legislative  vote  then  referred  only  to  sections,  it  would 
have  been  more  regular  to  speak  only  of  transfers  from  section  to 
section  and  not  of  transfers  from  chapter  to  chapter.  But  under 
this  last  formula  were  understood  transfers  between  the  chapters  of 
one  section  and  the  chapters  of  another  section  within  one  and  the 
same  ministry. 

2  This  memorandum  was  published  in  the  Journal  officiel  together 
with  a  very  flattering  letter  from  the  Emperor,  who  entrusted  the 
portfolio  of  Finance  to  the  author  of  the  memorandum. 


ADDITIONAL  APPROPRIATIONS 

which  might  be  brought  against  my  scheme,  but  I  find  none 
to  which  it  would  not  be  possible  to  make  answer." 

Evidently  the  idea  of  requiring  authorization  by  the  legis- 
lative body  in  the  matter  of  additional  appropriations  was 
making  considerable  progress.  But,  as  such  action  could  be 
only  intermittent  because  the  Chambers  were  not  permanently 
in  session,  the  power  of  making  transfers  was  reserved  for  the 
Executive,  when  the  Chambers  were  adjourned,  in  order  not 
to  block  the  course  of  affairs.  "I  see  in  this,"  added  the  minis- 
terial memorandum,  "the  only  practical  and  efficacious  way  to 
insure  the  continuation  of  public  works  during  the  absence  of 
the  legislative  body." 

The  transfers  thus  put  at  the  disposal  of  the  Government  Two 
formed  two  distinct  categories.  First,  any  portion  of  an  un-  Transfers 
used  item  of  appropriation  within  a  chapter  could  be  applied 
to  items  which  proved  to  be  inadequate.  Generally  speaking, 
transfers  of  this  kind  could  be  made  only  toward  the  end  of 
the  year,  when  a  surplus  had  become  apparent.^  They  were 
called  transfers  of  available  surpluses.  A  second  kind  of 
transfer  privilege,  more  dangerous  than  the  former,  permitted 
the  Executive  to  borrow  from  certain  chapters  a  portion  of 
their  appropriations,  available  at  the  moment,  in  order  to  meet 
the  urgent  needs  of  other  chapters.  Later,  l^efore  the  closing 
of  the  fiscal  period,  these  borrowing  chapters  would  undertake 
to  return  the  funds  temporarily  loaned  to  them.  That  this 
was  only  a  temporary  advance,  or  a  loan,  is  indicated  by  the 
title :  temporary  transfers  or  transfers  to  be  restituted.  Owing 
to  this  character  of  loan  the  Minister  was  able  to  await  in 
safety  until  funds  should  become  available,  either  through 
economies  or  through  supplements  of  resources  voted  by  the 
legislature.  If,  at  the  last  moment,  the  general  total  of 
budgetary  appropriations  was  exhausted,  it  became  necessary 
to  obtain  a  vote  from  the  legislature,  but  only  a  vote  in  ex- 
tremis demanded  after  the  disbursement. 

These  devices  of  1861  were  not  lacking  in  ingenuity  on  the  Dangers 
part  of  the  Executive.    On  the  one  hand,  they  seemed  to  con-  Transfer 
firm  the  powers  of  the  legislature,  while  in  reality  they  per-   Scheme 
mitted  the  Executive  to  nullify  them.     Because  of  their  false 

1  Briefly  this  procedure  consisted  in  using  the  annulled  amounts 
instead  of  letting  them  become  forfeited  to  the  Treasury.  This  is 
still  practiced  (as  we  shall  see),  as  soon  as  a  plan  for  a  supple- 
mentary appropriation  is  submitted  correlatively  with  a  plan  of  annul- 
ment. 

347 


THE  BUDGET 

appearance,  they  failed  in  practical  application.  Significant 
facts  soon  disclosed  the  sinister  side  of  the  scheme. 

In  1862,  for  example,  the  Executive — after  having  regularly 
obtained  in  June  an  initial  appropriation  for  the  expedition  to 
Mexico — transferred,  two  months  later,  a  second  appropria- 
tion amounting  to  26,000,000  (August,  1862),  without  even 
taking  the  trouble  to  cover  the  infraction  by  a  corresponding 
entry.  When,  later  on,  the  Chamber  remonstrated,  the  offi- 
cial speakers  hastened  to  acknowledge  the  mistake,  but  ex- 
cused it  by  saying  that  the  Executive  might  have  avoided  it 
through  a  decree  of  transfers.  This  had  not  been  done  be- 
cause the  "Chapters  of  the  Army  and  of  the  Navy  were  al- 
ready burdened  to  such  an  extent  that  they  permitted  no  ma- 
•  terial  transfers."  Therefore — the  official  speakers  insisted — 
it  was  only  the  infraction  of  a  formality.  The  Chamber,  with 
more  of  submission  than  conviction,  accepted  these  explana- 
tions and  voted  an  indemnity  bill,  not  without  observing,  how- 
ever, that  the  formality  was  futile  since  the  Executive  ab- 
stained from  complying  with  it. 

The  following  year,  1863,  the  Executive  appropriated  for 
its  own  purposes  93,000,000  francs,  ignoring  the  routine  for 
transfers,  because  it  recognized  the  futility  of  the  institution. 
(Report  of  Deputy  Larrabure,  January  4,  1864.) 
A  Final  Finally,  a  last  case  deserves  to  be  specially  cited.    The  cot- 

^^*^  ton  crisis,  which  occurred  toward  the  end  of  1862,  brought 

distress  to  the  workingmen  of  Rouen  and  neighboring  towns 
for  whom  an  appropriation  of  700,000  francs  for  urgent  sub- 
sidies was  made  by  means  of  a  transfer.  But  from  which 
chapter  were  these  700,000  francs  transferred?  From  that  of 
prisons.  Thus,  later  on,  when  the  Executive  wanted  to  make 
the  operation  a  regular  one,  it  limited  itself  to  demanding  from 
the  legislative  body  a  supplementary  appropriation  of  700,000 
francs  for  prisons,  with  never  a  word  about  the  cotton  crisis. 
The  actual  expenditure  had  disappeared. 

These  quid  pro  quos  discredited  the  system :  the  most  vivid 
reclamations  were  made  against  its  use  on  account  of  the  dis- 
order brought  about  through  bad  faith  in  execution.  Toward 
the  end  of  the  Empire,  the  system  spontaneously  fell  into  dis- 
use, without  being  officially  abrogated.^     Finally,  after  1870- 

^  The  fiscal  law  for  the  fiscal  period  1871,  the  last  ohe  passed  under 
the  Empire,  tried  to  regularize  the  transfers  by  prohibiting  their 
use:  (i)  with  regard  to  the  appropriations  from  the  public  debt; 
(2)  with  regard  to  extraordinary  appropriations  made  for  the  benefit 

348 


ADDITIONAL  APPROPRIATIONS 

1 87 1,  the  first  act  of  the  National  Assembly  was  to  include  in 
the  new  budgetary  constitution  the  following  provision :  "No 
transfer  of  appropriations  from  one  chapter  to  another  shall 
be  allowed/'     (Law  of  September  16,  1871,  Article  30.) 

Nobody  now  thinks  of  reestablishing  the  transfers:  gen- 
erally speaking,  they  rendered  only  illusory  services. 

of  ordinary  funds;  (3)  for  the  benefit  of  secret  funds.  (Law  of 
July  27,  1870,  Article  38.)  The  mere  statement  of  these  interdic- 
tions is  instructive  because  it  proves  that  until  then  transfers  per- 
mitted the  diversion  of  funds  of  the  public  debt  from  their  proper 
destination;  to  supply  the  ordinary  expenditures  with  extraordinary 
funds  and  to  increase  unduly  the  figure  of  the  secret  funds. 


349 


CHAPTER  XVII 
ADDITIONAL  APPROPRIATIONS 

Legislature  Holds  Power:  Villele's  Ordinance  of  1827;  Additional 
Legislation;  Two  Limits  Fixed;  Extraordinary  Appropriations 
Remain;  Appropriations  Under  Plea  of  Urgency;  M.  Thiers. 

Legislation  on  Additional  Appropriations:  Various  Measures; 
Legislature  Delegates  Authority;  Legislature  Circumscribes  Dele- 
gated Authority;  Supplementary  and  Extraordinary  Appropria- 
tions; Definitions;  Applications  of  the  Law;  Voted  Operations; 
Additional  Appropriations  Can  Issue;  Complementary  Appropria- 
tions; Some  Instances;  Belgium's  Experience. 

Annulments  of  Appropriations :  How  Annulments  Arise ;  Two  Forms 
of  Annulments;  Deceptive  Practices. 

Results  of  the  Regulation  of  Additional  Appropriations:  The  Stew- 
ardship of  the  Legislature;  Better  Results;  Possibilities  of  Re- 
trenchment ;  Some  Illustrations ;  Deception  in  Practice ;  Deliberate 
Delays  and  Deceptions ;  Admission  of  Abuses ;  Responsibility  Fixed. 

Additional  Appropriations  in  Foreign  Countries:  Italian  Experi- 
ence Satisfactory;  Satisfactory  Results  in  Belgium;  Railroads 
Upset  Calculations;  Experience  in  Prussia;  Russian  Experience 
Unsatisfactory;  Some  Cases  in  Point;  English  Estimates  Exact; 
Supplementary  Estimates;  Votes  of  Credits;  Summer  and  Spring 
Supplements;  Average  Additional  Appropriations;  Mr.  Goschen's 
Statement;  Effects  of  Boer  War;  Normal  Conditions  Restored; 
Reasons  for  English  Accuracy. 

The  only  efficacious  obstacle  against  the  tide  of  additional 
appropriations  lies  in  the  firm  determination  of  the  legislative 
body  to  oppose  them;  the  failure  of  procedures,  devised  for 
the  purpose  of  creating  an  artificial  check,  has  already  proved 
the  above  contention;  this  chapter  will  show  it  still  more 
clearly. 

The  legislature  possesses  the  same  sovereign  right  with  re- 
gard to  the  vote  on  supplements  to  appropriations  as  it  does 
with  regard  to  original  appropriations;  both  of  these  rights 
belong  to  the  legislature.  Its  complete  authority  in  the  prem- 
ises immediately  fixes  its  responsibility.  This  is  what  coun- 
tries, having  a  parliamentary  form  of  government,  finally  came 
to  understand,  and  their  legislation  has  taken  due  notice  of 
this  responsibility. 


ADDITIONAL  APPROPRIATIONS 

The  history  of  additional  appropriations  in  France  runs 
parallel  with  the  history  of  specialization  by  chapter  [special 
funding  of  different  activities].  The  two  routes  pass  through 
the  same  stages  and  stop  on  the  same  dates.  This  coincidence 
will  make  it  possible  to  abbreviate  this  part  of  the  discussion. 

As  in  the  preceding  chapter,  we  shall  pass  over  the  periods 
of  the  Consulat  and  the  Empire,  for  during  these  the  whim  of 
the  Executive  was  opposed  by  few  legal  barriers.  The  law 
of  March  25,  181 7 — that  which  inaugurated  the  specialization 
of  votes  by  ministry — marks  the  points  of  departure.  This 
law  authorized  supplements  to  appropriations  "in  ex- 
traordinary and  urgent  cases,  on  the  basis  of  Royal  Or- 
dinances, which  had  to  be  converted  into  laws  at  the  next  ses- 
sion of  the  Chambers." 

The  voting  on  supplements  to  appropriations  rests,  in  prin- 
ciple, with  the  representatives  of  the  country.  Only  under 
extraordinary  and  urgent  circumstances  was  the  authority  of 
the  king  sufficient  warrant  to  authorize  the  issue  of  supple- 
mentary appropriations  and  then  they  were  to  be  referred  to 
the  Legislature  within  the  shortest  possible  time.  The  words 
extraordinary  and  urgent  left  to  the  Executive  every  possible 
latitude  with  no  other  limit  than  its  own  interpretation.  The 
law  of  June  27,  18 19,  vainly  insisted  upon  the  necessity  of  con- 
verting into  laws,  within  the  shortest  possible  time,  the  [ex- 
ecutive] ordinances  on  supplements  to  appropriations  (Article 
21);  this  guarantee,  however,  was  belated  and  the  formality 
powerless  in  the  presence  of  actual  facts. 

There  were  several  attempts  at  reform,  but  nothing  was  Villele's 
changed  until  1827.  Then,  the  ordinance  of  September  i,  o/fg"^"^^ 
1827,  was  issued  by  de  Villele.  This  ordinance  has  already 
been  quoted  for  the  purpose  of  showing  its  lil^eral  provisions, 
introducing  the  voting  by  sections  of  ministries.  But  so  far 
as  additional  appropriations  are  concerned,  the  ordinance  in 
question — far  from  proceeding  along  progressive  lines — retro- 
graded considerably  by  ordering  that,  in  the  future,  the  ordi- 
nances relating  to  additional  appropriations  should  be  con- 
trolled by  the  law  definitely  regulating  the  budget.  Doubtless 
this  provision  referred  only  to  ''expenditures  relating,  to  ordi- 
nary operations  voted  by  the  budget,  which,  on  account  of 
unforeseen  circumstances,  would  have  exceeded  the  total  of 
the  special  sections  (Article  4)";  this  would  exclude  ex- 
traordinary appropriations.  The  old  rule  of  the  laws  of  181 7 
and  18 1 9 — according  to  which  it  was  necessary  in  every  case 

351 


THE  BUDGET 


Additional 
Legislation 


Two  Limits 
Fixed 


to  refer  them  to  the  Chambers  as  soon  as  they  met — was  par- 
tially abrogated,  and  appropriations  to  be  ratified  at  some 
subsequent  date  perpetuated  the  abusive  initiative  of  the  Gov- 
ernment, under  the  name  of  complementary  appropriations 
(Article  4),  of  which  we  shall  speak  later. 

After  the  Revolution  of  1830 — when  the  law  of  January 
29,  183 1,  installed  the  voting  by  chapter — the  laws  of  April 
24,  1833,  and  of  May  23,  1834,  undertook  in  turn  to  put  the 
authorization  of  additional  appropriations  on  a  sounder  basis. 
The  law  of  April  24,  1833,^  abrogated  the  ordinance  of  1827 
and  rendered  obligatory  the  ratification  of  all  ordinances  on 
supplements  to  appropriations  at  the  ensuing  session  of  the 
Chambers.  Then,  the  law  of  May  23,  1834,^  attempted  to 
give  to  the  law  of  March  25,  18 17,  the  precision  which  it 
lacked.  In  order  to  achieve  this  purpose,  this  law  began  by 
proclaiming  the  principle  that  all  supplements  to  appropria- 
tions should  receive  the  sanction  of  the  deputies.  As  an  ex- 
ception only,  the  law  by  an  enumeration  subsequently  desig- 
nated those  appropriations,  which  in  certain  cases  might  tem- 
porarily be  made  by  a  simple  ordinance.  The  sphere  of  power 
entrusted  to  the  Government  in  the  absence  of  the  Chambers 
was  thus  distinctly  defined.  "The  terms  of  the  law  of  181 7 
which  regulate  this  question  are  too  vague.  ...  It  would  be 
an  advantage  both  for  the  Government  and  for  the  Chambers 
to  confine  within  more  definite  limits  the  power  to  increase 
the  expenditures  of  the  State  by  ordinance  or,  in  other  words, 
to  add  to  the  budget."  (Report  of  Count  Duchatel  on  the 
budget  plan  for  1835.)  The  law  of  1834  distinguished  in  the 
budgets  two  categories  for  determining  expenditures;  the  one 
figured  out  the  definite  amount,  or  a  certain  maximum  ar- 
rived at  through  knowledge  of  conditions  giving  rise  to  the 
expenditure;  the  other  included  expenditures  estimated  as 
probable  without  having  exact  data  on  which  to  base  a  calcu- 
lation.   These  are  the  liynited  appropriations  and  the  estimated 

^  This  law  also  contains  provisions  relating  to  the  counter-signa- 
ture of  the  ministers  and  the  submitting  of  the  plans  by  the  Minister 
of  Finance. 

2  The  deputy  reporting  on  the  budget  to  the  commission  on  budget 
for  1835  started  by  stating  that  the  figure  of  additional  appropria- 
tions was  progressing  constantly.  For  1832  the  Chamber  voted  addi- 
tional appropriations  for  more  than  57,000,000,  for  1833  for  more 
than  26,000,000;  the  supplements  demanded  for  1834  exceeded  41,- 
000,000  francs.  The  impotency  of  the  system  was  thus  demonstrated 
and  its  reform  became  imperative. 


ADDITIONAL  APPROPRIATIONS 

appropriations  of  which  we  have  spoken.^     These  are  called 
in  the  law  of  1834  the  fixed  allotments  and  voted  operations. 

"The  budget  is  divided  on  the  one  hand  into  voted 
operations,  the  expenditures  of  which  may  not  corre- 
spond with  the  estimates;  on  the  other  hand,  into  fixed 
allotments  within  the  limits  of  which  the  administration 
must  keep  itself.*'     (Report  of  Count  Duchatel.) 

Owing  to  this  rational  division,  it  was  possible  to  stipulate 
that  the  fixed  allotments  should,  under  all  circumstances,  re- 
main within  the  limits  imposed  by  law ;  but  that  under  certain 
circumstances  the  voted  operations  njight  be  released.  "Article 
II.  The  power  to  make,  by  ordinance  of  the  king,  supple- 
mentary appropriations  ...  in  order  to  provide  for  a  prop- 
erly justified  deficiency  of  an  operation  contained  in  the 
budget,  can  be  applied  only  to  expenditures  of  a  voted  opera- 
tion, the  enumeration  of  which  follows."  (Fiscal  law  of  May 
23,  1834.)  This  enumeration  contained  the  titles  of  thirty-six 
budgetary  chapters  composed  of  operations  analogous  to  those 
quoted  above,  as  examples  of  estimated  appropriations.  These 
were  particularly  the  expenditures  for  criminal  justice, 
premiums,  purchases  of  provisions  and  forage,  interest  on  the 
floating  debt,  remittances  to  tax  collectors,  purchases  and 
transportation  costs  of  tobacco,  reimbursements  and  restitu- 
tions, etc.^ 

The  others  remained  in  the  hands  of  the  legislature.    The  Extraor- 
last   article,   however,   declared:     "Article   12.      The  power  ^*"^^y    . 

'..  rii  riv/r  rt  i        Appropria- 

granted  by  Article  152  of  the  law  of  March  25,  10 17,  to  make  tions 
appropriations  by  ordinance  of  the  king  for  urgent  and  ex-  Remain 
traordinary  cases,  can  be  applied  only  to  operations  which 
could  not  be  anticipated  and  regulated  by  the  budget."  The 
extraordinary  appropriations,  accordingly,  still  remain  a  dan- 
gerous exception  outside  of  the  law.  It  was  sufficient  for  a 
new  expenditure  to  assume  the  character  of  urgency  only  in 
the  eyes  of  the  Government ;  it  could  at  once  on  its  own  initia- 
tive, and  in  the  absence  of  the  Chambers,  authorize  the  ex- 
penditure by  means  of  additional  appropriations. 

Here  was  the  undoing  of  the  law  of  1834.    The  Executive 

1  See  Chapter  VII. 

2  The  laws  of  1871  and  1879  reproduce,  as  we  shall  see,  this  pro- 
vision of  the  law  of  May  23,  1834. 

353 


THE  BUDGET 


Appropria- 
tions Under 
Plea  of 
Urgency 


abused  the  right  contained  in  Article  12.  In  1840,  particu- 
larly, the  Cabinet  of  March  i,  presided  over  by  Thiers  under 
the  plea  of  urgency  and  by  means  of  a  simple  [executive] 
ordinance — while  satisfying  the  Ministers  of  War  and  of 
Public  Works  with  an  appropriation  of  12,000,000  francs — 
appropriated  100,000,000  for  the  fortification  of  Paris.^  At 
the  same  time,  because  of  European  complications  which  were 
threatening,-  Thiers,  without  convening  the  Chambers, 
thought  that  by  the  signature  of  the  king  only,  he  could  create 
twelve  regiments  of  infantry,  four  regiments  of  cavalry,  bat- 
teries of  artillery,  etc.,  thus  involving  a  permanent  expendi- 
ture of  more  than  50,000,000.^  (Ordinances  of  September 
21,  28  and  29,  1840.)  Finally,  without  ordinances  and  with- 
out any  appropriations  whatsoever,  the  deceptive  formalities 


^  Ordinance  of  the  king  which  declared  the  public  usefulness  and 
the  urgency  of  the  works  of  fortifications  to  be  executed  around  the 
City  of  Paris:  "Louis-Philippe,  etc.,  in  view  of  the  opinion  of  the 
commission  of  defence  of  the  Kingdom  ...  in  view  of  Article  11  of 
the  law  of  May  23,  1834,  relating  to  appropriations  for  unforeseen 
operations  .  .  .;  Article  i.  The  works  to  be  executed  about  the  City 
of  Paris  are  herewith  declared  to  be  a  public  utility  and  of  an  urgent 
nature."     (September  10,  and  16,  1840.) 

The  question  of  the  fortification  of  Paris,  thus  entered  upon,  was 
again  taken  up  by  the  legislature  in  1841 ;  it  caused  memorable  dis- 
cussions which  resulted  in  the  law  of  April  3,  1841,  allotting  140,000,- 
000  to  the  work  in  question  and  ratifying  the  opening  of  a  temporary 
appropriation  of  13,000,000. 

2  In  spite  of  the  favorable  disposition  manifested  by  France  for 
the  Pasha  of  Egypt,  the  other  powers  acted  against  Mehemet-Ali 
and  the  Treaty  of  London  of  July  15,  1840,  eliminated  France  from 
the  European  concert.  It  was  necessary  after  that  time  to  face  the 
possibility  of  a  war.  Already  the  Oriental  question  had  caused  dan- 
gerous complications.  Thiers  deemed  it  his  duty  to  increase  the 
forces  of  the  Army  and  of  the  Navy.  He  did  it,  however,  outside 
of  the  legislature  to  such  an  extent  that  upon  his  retirement  from 
the  ministry,  about  the  end  of  October,  1840,  the  teuiporary  appro- 
priations which  had  been  made  and  already  used  up  had  not  as  yet 
received  the  sanction  of  the  legislature.  In  this  lies  his  grave  politi- 
cal and  financial  mistake. 

8  The  ordinance  of  September  21,  1840,  reads  as  follows:  'Arti- 
cle I.  An  extraordinary  appropriation  of  57,674,000  francs  is  made 
for  our  Minister  of  War  in  the  fiscal  period  1840  for  the  purpose  of 
providing  for  the  urgent  expenditures  resulting  from  the  increase  of 
the  effective  force  and  of  the  material  of  the  Army,  which  expendi- 
^tures,  although  not  anticipated  in  the  budget  for  the  said  fiscal  period, 
refer  to  special  chapters  designated  hereinafter.  Article  2.  The 
regularization  of  this  extraordinary  appropriation  will  be  suggested 
to  the  Chambers  at  their  next  session." 


354 


ADDITIONAL  APPROPRIATIONS 

were  dropped;  the  bargaining  of  all  kinds  which  was  going 
on,  both  for  the  Navy  and  for  the  Army,  made  it  necessary 
to  submit  at  the  following  session  of  the  Chambers  a  de- 
mand for  an  extraordinary  appropriation  of  145,000,000,  for 
the  purpose  of  balancing  the  accounts.  Thus,  within  a  few 
months,  without  the  cooperation  of  the  Chambers,  simple  ad- 
ministrative acts  had  actually  involved  more  than  300,000,000. 

The  Opposition,  in  the  course  of  the  discussion  which  took  M.  Thiers 
place  in  1841,  went  so  far  as  to  accuse  Thiers  of  having  bur- 
dened France,  through  his  warlike  measures,  with  over  1,000,- 
000,000  of  supplementary  expenditures.  Thiers  showed  the 
exaggeration  of  the  charges,  for  which  he  alone  had  not  been 
responsible.  Nevertheless,  it  can  hardly  be  denied  that,  be- 
ginning with  this  period,  the  finances  of  the  country  became 
entangled.  Clearly,  it  is  dangerous  to  entrust,  even  to  the 
wisest — and  the  liberator  of  the  country  well  demonstrated 
after  1871  his  profound  wisdom — the  power  to  make 
budgetary  appropriations  without  the  concurrence  of  the 
legislature.^ 

In  spite  of  the  episode  of  1840,  the  law  of  1834  continued 
to  operate  until  the  end  of  the  July  Monarchy.  No  special 
arrangement  was  made  in  1848.  Then,  under  the  Second  Em- 
pire, the  Scnatus-C onsiiltes  of  1852, ^  1861  ^  and  1869,*  made 

^  Read  the  newspapers  of  the  time,  the  discussions  of  the  Cham- 
bers and  the  work  of  M.  Thureau-Dangin  (fourth  volurne)  on  the 
subject  of  the  attitude  of  Thiers  in  1840,  his  military  aspirations,  his 
plans  of  campaign,  his  souvenirs  of  Napoleon.  Lamartine  exclaimed 
as  follows :  "It  is  necessary  to  discourage  the  imitators  of  Napoleon." 
"Oh,"  replied  Thiers,  "who  could  think  of  imitating  him?"  "You 
are  right,"  replied  Lamartine;  "I  wanted  to  say  the  parodists  of 
Napoleon." 

2  The  fiscal  law  of  July  8,  1852,  maintained  the  laws  of  1833  and 
1834.  Only  the  Sniatus-Consulte  of  December  25,  1852,  added  the 
power  to  be  given  to  the  head  of  the  State  to  order,  on  his  own 
authority,  all  works  of  public  utility,  all  enterprises  of  general  utility 
and  to  make  temporarily  all  extraordinary  appropriations  for  these 
purposes. 

^  The  Senatus-Consiilte  of  December  31,  1861,  set  forth  as  a  prin- 
ciple :  ''That  no  supplementary  appropriations  or  extraordinary  appro- 
priations shall  be  made,  unless  by  virtue  of  a  law";  this  Senatus- 
Constdte  admitted  at  the  same  time  the  possibility  of  making  trans- 
fers, the  abuses  of  which,  as  we  have  seen,  absolutely  destroyed  the 
good  effects  which  the  application  of  the  above  principle  might  have 
produced. 

*  Finally,  the  Senatus-Considte  of  September  8,  1869,  without  con- 
taining any  special  provision  with   regard  to  additional  appropria- 

355 


THE  BUDGET 

the  additional  appropriations  take  the  same  steps  as  the  specifi- 
cation of  votes.    Thus,  we  come  at  once  to  1 870-1 871. 

Legislation  on  Additional  Appropriations 

The  National  Assembly  from  1871  to  1875,  taking  up  the 
question  where  it  had  been  dropped  by  the  Monarchy  of  July, 
solved  the  problem  definitely  by  the  law  of  September  16, 
1871.^  This  law  made  the  vote  of  the  legislature  obligatory 
on  all  supplements  to  appropriations,  except  during  the  period 
of  adjournment  of  the  Chambers;  it  also  limited  additional 
appropriations  which  might  be  made  by  executive  ordinance 
during  adjournment  to  a  specified  list  of  voted  operations. 
These  are  the  main  features  of  the  new  order  of  things  which 
has  existed  to  our  day. 

The  law  of  1871  was  superseded  by  one  of  December  14, 
1879,  containing  the  same  principles  but  outlining  greater  pre- 
cision with  regard  to  details.^  This  law  will  constitute  the 
only  subject  of  further  study,  because  it  codified  all  the  regu- 
lations governing  additional  appropriations. 

Beginning  with  its  first  article,  the  law  of  December  14, 
1879,  proclaimed  the  fundamental  principle,  announced  at  dif- 
ferent times  with  more  or  less  sincerity  by  preceding  laws: 
"No  supplementary  and  extraordinary  appropriations^  shall 
be  made  except  by  virtue  of  a  law.'*  All  new  legislation  rests 
on  this  article — the  power  to  make  additional  appropriations, 
like  any  other  appropriation,  rests  with  the  legislature  alone. 
If  it  were  necessary,  therefore,  to  answer  in  a  word  the  ques- 
tion: By  whom  are  the  additional  appropriations  author- 
ized? It  would  be  sufficient  to  answer:    By  the  Legislature. 

tions,  concurs  in  curbing  the  encroachments  of  the  executive  power 
by  introducing  the  "vote  by  chapter"  into  the  budgetary  legislation. 

^  The  law  of  September  16,  1871,  which  proclaimed  the  vote  by 
chapter  and  abolished  the  power  of  making  transfers,  has  been 
already  cited. 

2  The  only  innovation  in  the  law  of  July  14,  1879,  consisted  of  a 
definition  of  supplementary  and  extraordinary  appropriations  and  of 
specifying  the  words  in  case  of  adjournment  of  the  National  As- 
sembly. 

8  The  law  of  1879  would  have  done  much  better  by  using  the 
generic  term  of  additional  appropriations  from  the  beginning — par- 
ticularly because  its  enumeration  of  supplementary  and  extraordinary 
appropriations  is  incomplete,  as  we  shall  see,  for  complementary  ap- 
propriations are  still  in  existence. 

356 


ADDITIONAL  APPROPRIATIONS 


This  principle  dominates  the  entire  subject;  the  rest  of  the 
law  of  1879  treats  only  of  the  exceptions. 

What  warrants  these  exceptions?  The  lack  of  perma- 
nency in  the  sessions  of  the  Chambers.  If  the  deputies  were 
always  in  session,  the  rule  of  the  law  would  be  absolute. 
Many  causes,  however,  both  periodical  and  incidental,  suspend 
the  sessions.  Therefore,  in  view  of  unforeseen  events  which 
may  occur  during  periods  of  adjournment,  the  legislature 
delegates  a  portion  of  its  power  to  the  only  permanent  author- 
ity [the  Executive,  to  make  additional  appropriations  by  ordi- 
nance]. The  main  thing  is  to  define  carefully  the  scope  of 
this  necessary  delegation,  in  order  to  avoid  giving  it  too  great 
range  as  was  done  in  the  law  of  181 7  through  the  words 
extraordinary  and  urgent.  The  laws  of  1871  and  1879  were 
careful  to  use  definite  formulae. 

First,  the  period  during  which  the  Chambers  are  not  in  ses- 
sion— 'when  there  is  the  possibility  of  exceptional  provisions 
being  made — is  exactly  determined.  But  when  are  the  Cham- 
bers adjourned?  The  first  paragraph  of  Article  2  of  the  Con- 
stitutional Law  of  July  16,  1875  (Article  4)^  defined  this  so 
as  to  exclude  formally  the  case  of  dissolution,  which  the 
broader  terms  of  the  original  law  of  1871  had  unwisely  in- 
cluded. The  political  incidents  of  May  16,  1877,  had  ren- 
dered the  deputies  more  cautious.  The  Government  of  May 
16 — as  may  be  recalled,  after  the  Chamber  had  been  dis- 
solved at  its  instance — made,  in  conformity  with  the  pro- 
visions of  the  law  of  1871,  a  number  of  additional  appropria- 
tions in  order  to  conduct  the  regular  operations  until  the  con- 
vening of  the  new  Chaml^er.  Since  it  did  not  convene  until 
November,  and,  as  the  crisis  of  May  16  had  culminated  in  the 
refusal  to  vote  the  budget,  the  deputies  were  more  than  ever 
convinced  that  it  was  absolutely  necessary  for  them  to  consoli- 
date their  political  power  by  maintaining  their  budgetary 
prerogative  [their  control  over  the  purse].  The  list  of  cases, 
where  the  force  of  circumstances  might  divest  them  of  their 
sovereignty  in  appropriation  matters,  was  carefully  revised  in 
1879.  During  the  normal  intervals  between  sessions  the  Ex- 
ecutive was  to  hold  certain  enumerated  powers.  In  case  of 
dissolution,  however — that  is,  in  the  case  of  an  anticipated 

^  The  first  paragraph  of  Article  2  of  the  law  of  July  16,  1875,  says: 
"The  President  of  the  Republic  pronounces  the  closing  of  the  session. 
He  has  the  right  to  call  an  extraordinary  session  of  the  Cham- 
bers. ..." 

357 


Legislature 

Delegates 

Authority 


Legislature 
Circum- 
scribes 
Delegated 
Authority 


Supplemen- 
tary and 
Extraordi- 
nary Appro- 
priations 


THE  BUDGET 

dismissal  of  the  Chambers,  a  dismissal  brought  about  by  the 
Executive — no   exception  would  be  justified.^ 

The  period  of  absence  of  the  Chambers  being  thus  inter- 
preted, the  question  arises :  What  exceptional  rights  shall  be 
granted  the  Executive  during  such  vacation  of  the  Chambers  ? 

The  law  of  1879  began  by  distinguishing  supplementary 
appropriations  from  extraordinary  appropriations.  Its  defini- 
tions were  rather  complicated;  the  exact  text  of  the  definition 
of  extraordinary  appropriations  follows: 

"Extraordinary  appropriations  are  those  which  are 
caused  by  urgent  and  unforeseen  circumstances  and  the 
purpose  of  which  is  either  the  establishment  of  a  new 
operation  or  the  extension  of  an  operation  contained  in 
the  fiscal  law,  beyond  the  limits  determined  by  that  law." 
(Article  2  of  the  law  of  December  14,  1879.) 

We  can,  without  changing  it  materially,  reduce  this  defini- 
tion to  simpler  terms:  "Extraordinary  appropriations  apply 
to  operations  or  portions  of  operations  not  anticipated  by  the 
legislature."  This  formula,  therefore,  divides  extraordinary 
appropriations  into  two  categories :  one  applying  to  operations 
not  anticipated  in  their  entirety ;  the  other  applying  to  por- 
tions of  unanticipated  operations.  In  case  of  the  first,  that  is, 
of  operations  not  carried  in  their  totals  in  the  budget,^  the 
principle  of  the  law,  according  to  which  every  authorization  of 


^  "Does  the  executive  power  need  funds  outside  of  the  estimates 
of  its  own  budget?  In  the  first  place,  as  far  as  I  am  concerned,  I 
admit  that  I  am  by  no  means  very  much  annoyed  by  the  fact  that 
the  budget  is  prepared,  thought  over,  and  discussed  in  such  a  way 
that  the  estimates  are  rarely  mistaken.  But  1  acknowledge  that  there 
are  cases  where  the  estimates  can  be  exceeded.  .  .  .  Then,  if  the 
Chamber  of  Deputies  is  dissolved,  convene  the  electors  so  that  they 
may  promptly  elect  a  new  Chamber;  then  the  executive  power  shall 
be  armed  and  shall  proceed  by  regular  means.  It  depends  upon  the 
executive  power  not  to  use  the  delay,  the  maximum  of  which  is  three 
months.  Let  the  executive  power  shorten  this  delay;  this  is  the  mo- 
tive which  our  law  favors."  (Speech  of  Senator  Bertauld,  reporting 
on  the  bill,  March  25,  1879.) 

2  As  an  example  of  an  extraordinary  operation  of  this  first  cate- 
gory, we  may  cite  the  experiment  of  mobilisation  witliin  a  territory 
of  one  army  corps,  which  formed  in  1887  a  "new"  chapter  of  the 
budget  of  the  Ministry  of  War  by  means  of  an  extraordinary  appro- 
priation, with  an  allotment  of  7,000,000  francs.      (Law  of  July  29, 

1887.) 

358 


ADDITIONAL  APPROPRIATIONS 

appropriations  shall  emanate  from  the  legislative  body,  re- 
mains in  full  force.  Here  is  the  first  kind  of  appropriation 
.which  the  Executive  is  always  forbidden  to  make,  even  dur- 
ing the  absence  of  the  Chambers. 

In  case  of  operations  partly  entered  in  the  budget,  which 
only  need  an  extension  beyond  their  original  limits,  the  legis- 
lature— having  already  pronounced  its  opinion  on  the  subject 
of  the  operation  itself,  and  the  demand  of  the  Executive  re- 
lating only  to  a  supplement  to  the  main  operation — permits  the 
Executive  to  go  ahead  temporarily,  under  certain  conditions 
and  during  the  absence  of  the  legislature.  The  appropriation 
still  retains  its  extraordinary  character,  because  "the  limits 
determined  primarily  by  the  law  have  been  transgressed." 

"Supplementary  appropriations,"  declared  the  law  of  Definitions 
December  14,  1879,  "are  those  which  have  to  provide  for 
the  deficiency  in  an  operation  entered  in  the  budget,  the 
purpose  of  which  is  the  carrying  on  of  an  operation  al- 
ready voted,  without  changing  its  nature."     (Article  2.) 

Again,  reducing  this  definition  to  simpler  terms,  we  may 
say:  "The  supplementary  appropriations  tend  exclusively  to 
increase  the  allotments  for  operations  already  entered  in  the 
budget."  They  establish  no  new  operation  or  extension 
thereof;  they  maintain  the  items  of  the  expenditures  in  the 
same  categories  as  the  budget  [act  of  appropriation]  fixed 
them,  limiting  themselves  to  increasing  the  figures  of  their 
allotments.  n 

Recapitulating,  the  extraordinary  appropriations  of  the  first 
category  apply  to  new  operations  entirely  unknown  to  tlie 
original  budget;  the  extraordinary  appropriations  of  the  sec- 
ond category  apply  to  new  operations,  as  far  as  the  portion 
to  be  attached  to  the  original  operation  is  concerned.  As  for 
supplementary  appropriations,  they  refer  only  to  the  figures, 
without  touching  the  titles  at  all. 

The  classification  of  the  law  of  1879  would  have  been  much 
clearer  and  just  as  rational,  if  it  had  called  the  additional 
appropriations  relating  to  entirely  new  operations  ex- 
traordinary appropriations,  and  the  additional  appropriations 
relating  to  new  portions  of  the  operation  and  to  increases  of 
figures  of  existing  allotments,  supplementary  appropriations. 
Then  the  extraordinary  appropriations  alone  would  have  been 
kept  within  the  law,  while  the  need  of  a  decree  in  the  absence 

359 


THE  BUDGET 


Applications 
of  the  Law 


Voted 
Operations 


of  the  Chambers  would  have  been  reserved  for  the  supple- 
mentary appropriations.  Nothing  seems  to  be  more  obscure 
at  first  than  these  two  divisions  made  within  the  extraordinary 
appropriations.  Be  this  as  it  may,  the  Government,  according 
to  the  terms  of  the  law  of  1879,  may  act  only  in  case  of  the 
last  two  classes  of  additional  appropriations — the  ex- 
traordinary appropriations  of  the  second  category  and  sup- 
plementary appropriations.  The  following  conditions  must 
also  be  observed. 

First,  the  plans  of  the  decrees  must  be  discussed  and  ap- 
proved by  the  council  of  ministers  and  the  decrees  must  be 
issued  by  the  Council  of  State:  the  first  formality  needs  no 
further  explanation.  Let  us  state,  however,  that  the  discus- 
sion by  the  council  of  ministers  is  a  Government  activity  of 
a  routine  nature,  very  properly  classified  among  the  pallia- 
tives, which  we  have  cited  previously  in  connection  with  the 
legislation  of  1833  and  1851. 

The  approval  by  the  Council  of  State  would  eventually  pos- 
sess a  greater  importance. 

The  law  of  1879  stipulated,  in  the  second  place,  that  "the 
decrees  shall  indicate  the  ways  and  means  for  the  demanded 
appropriations,"  which  is  another  element  of  control.  (Laws 
of  1836  and  1851.) 

In  the  third  place,  "only  voted  operations — a  list  of  which 
shall  be  attached  each  year  to  the  fiscal  law^^hall  permit  the 
making  of  supplementary  appropriations."  (Article  5  of  the 
law  of  December  14,  1879.)  This  is  the  resurrection  of  the 
provisions  of  the  law  of  May  23,  1834,  which  has  been  men- 
tioned ;  these  provisions  limiting  the  rights  of  the  Government 
to  estimated  appropriations,  or  voted  operations ,  are  wise.* 
The  designation  of  voted  operations  is  not  left  to  the  arbi- 
trary decision  of  the  executive  power.  A  list  is  prepared  by 
the  legislature  in  accordance  with  the  law  of  1834,  and  at 
present  prepared  annually,  in  keeping  with  the  laws  of  1871 
and  1879.  In  each  fiscal  law,  therefore,  there  is  now  an  article 
referring  to  an  annexed  table,  mentioned  in  the  Means  of 
operations  and  annual  provisions,^  which  table  enumerates  the 
chapters  under  which  supplementary  appropriations  can  be 
opened  during  the  adjournment  of  the  Chambers. 

Finally,  the  decrees  making  additional  appropriations  must 


1  See  Chapter  VII. 

2  See  Chapter  IX. 


360 


ADDITIONAL  APPROPRIATIONS 

be  submitted  for  approval  to  the  Chambers  within  the  first 
fifteen  days  after  they  convene. 

For  the  sake  of  clearness,  let  us  recapitulate  these  five  re- 
strictions [the  conditions  under  which  additional  appropria- 
tions can  be  issued]  :   ( i )  Absence  of  the  Chambers  on  account  Additional 
of  adjournment  but  not  on  account  of  dissolution;  (2)  ex-  tio^s^^CalT" 
elusion  of  additional  appropriations  entering  into  the  category  Issue 
of  extraordinary  appropriations  of  the  first  class;  (3)  the  an- 
nual list  made  by  the  legislature  of  chapters  to  which  supple- 
ments of  appropriations  can  apply  exclusively;  (4)  decrees  ap- 
proved by  the  council  of  ministers  and  issued  by  the  Council 
of  State;  indication  of  ways  and  means;  (5)  reservation  of 
the  sanction  of  the  legislature,  which  must  be  demanded  within 
fifteen  days  from  its  convocation. 

The  law  of  1879  does  not  mention  the  last  kind  of  additional 
appropriations,  the  complementary  appropriations  which,  as 
a  matter  of  fact,  should  not  exist. 

Their  establishment  in  1827,  by  the  ordinance  of  September 
I,  has  been  mentioned  above.  The  laws  of  1833  and  1834 
abolished  them,  and  in  fact  from  that  time  until  the  present 
they  have  not  reappeared.  It  was  quite  surprising  when 
Article  32  of  the  decree  of  May  31,  1862,  mentioned  them.^ 

After  an  interval  of  forty  years,  however,  the  laws  regu-  Complemen- 
lating  the  fiscal  period  1870^  and  1871^  restored  comple-  pHations^"^"" 
mentary   appropriations   to   their    former   importance.     The 

^  Article  32  of  the  decree  of  May  31,  1862,  declared:  "Operations 
of  regularization,  subsequent  to  the  closing  of  the  fiscal  period,  form 
the  subject  of  special  suggestions  in  the  law  of  regulation."  The 
question  arises  whether  these  rather  vague  terms  are  sufficient  for 
the  authorization  of  the  restoration  of  complementary  appropriations 
and  whether,  by  the  way,  article  32  is  not  implicitly  abrogated  by 
article  4  of  the  law  of  January  25,  1889.  (See  on  the  subject  the 
work  of  M.  Victor  Marce,  Councilor  of  the  Cotir  dcs  Comptes,  con- 
cerning the  law  of  January  25,  1889.) 

2  The  law  of  regulation  of  the  fiscal  period  1870  provided :  "The 
appropriations  made  by  the  fiscal  law  of  May  8,  1869,  and  by  various 
special  laws  are  increased  by  the  sum  of  798,785,911.32  francs,  hy 
complementary  appropriations."  (Law  of  August  5,  1882,  regulating 
the  fiscal  period  1870.) 

^  The  law  of  regulation  of  the  fiscal  period  1871  reads  as  follows: 
"Appropriations  made  by  the  fiscal  law  of  July  27,  1870,  and  by 
various  special  laws  are  increased  by  the  sum  of  504,613,098.68  francs 
'by  complementary  appropriations/"  (Law  of  July  23,  1885,  regu- 
lating the  budget  for  1871.) 

These  two  items  of  complementary  appropriations  together  amount 
to  more  than  1,300,000,000. 

361 


THE  BUDGET 

events  of  the  war  justified  their  resurrection,  which,  by  the 
way,  was  only  temporary.  In  1873,  1874,  1875  and  1876* 
the  figures  involved  decreased  successively.  They  disappeared 
completely  in  1877.  The  Minister  of  Finance  even  officially 
informed  his  colleagues  by  a  circular  note,  dated  June  12, 
1879,  that  the  procedure  of  complementary  appropriations 
should  no  longer  be  permitted. 

A  bill,  however,  relating  to  the  regulation  of  the  fiscal 
period  1882,  on  December  5,  1885,  called  them  back  unex- 
pectedly. In  1882,  the  expenditures  of  the  Tunis  expedition 
exceeded  the  appropriations  of  several  chapters  by  a  total  of 
5,744,112  francs,  82  c,  as  the  result  of  delivering  urgent  or- 
ders for  payment,  which  was  not  a  regular  procedure  in  the 
service  of  the  Army.  The  Government  first  demanded  from 
the  Chambers  an  indemnity  bill  under  the  form  of  supple- 
mentary appropriations.  The  commission  on  budget  having 
rejected  this  demand  on  November  12,  1884,  the  Chambers  on. 
May  30,  1885,  approved  the  judgment  of  the  commission.  Not 
knowing  what  step  to  take  and  having  exceeded  the  appropria- 
tions by  5,744,112  francs,  82  c,  the  Government  at  the  end 
of  three  years  decided  to  enter  this  amount  in  the  bill  regu- 
lating the  fiscal  period  for  1882,  under  the  form  of  a  com- 
plementary appropriation,  according  to  the  ancient  method.^ 
The  statement  of  supporting  arguments  explained  that,  only 
because  it  was  tired  of  the  conflict,  had  the  Government  de- 
cided to  resort  to  this  antiquated  system. 
Some  Nearly  all  subsequent  budget  plans  continued — timidly  of 

course  and  with  many  excuses — to  formulate  suggestions  of 
complementary  appropriations  which  revealed  overdrafts  in 

1  In  1872  the  complementary  appropriations  suggested  by  the  bill 
of  definite  regulation  did  not  exceed  4,790.89  francs;  in  1873,  835,- 
434.66  francs;  in  1874,  199,860.51  francs;  in  1875,  477,095.04  francs. 
Finally,  in  1876,  the  total  of  complementary  appropriations  suggested 
by  the  Government  came  down  to  14  francs.  The  law  of  regulation 
of  March  6,  1890,  however,  increased  this  amount  to  291,014  francs, 
including  the  ratification  of  appropriations  made  by  decrease  during 
the  dissolution  of  the  Chambers.  For  the  same  reason,  2,536,094.31 
francs  of  complementary  appropriations  were  entered  in  the  law  of 
regulation  for  the  fiscal  period  1877.     (Law  of  March  12,  1890.) 

-  When  the  ordinance  of  1827  established  complementary  appro- 
priations, near  the  close  of  the  fiscal  period  the  laws  of  regulation 
were  the  subject  of  serious  discussion;  this  was  a  double  guarantee 
which  is  now  entirely  lacking.  To  revive  complementary  appropria- 
tions would  not  be  to  return  to  the  mistakes  made  by  M.  de  Villele,  as 
the  statements  of  supporting  arguments  pretend. 

362 


Instances 


ADDITIONAL  APPROPRIATIONS 

appropriations,  often  considerable  ones  and  uncontrolled.^ 
Thus,  the  bill  regulating  the  fiscal  period  for  1893  demanded 
10^559,417  francs  for  the  Ministries  of  Justice,  War,  Fi- 
nances, the  Navy  and  the  Colonies.^  The  bill  regulating  the 
fiscal  period  for  1897  demanded  15,962,000  francs  for  the 
Ministries  of  War  and  the  Colonies.  For  1896,  the  com- 
plhnentary  appropriations  totalled  only  2,034  francs,  and  in 
1898  they  disappeared  completely.  (Bill  of  regulation  of  Jan- 
uary II,  1900.)  In  1904,  all  columns  having  the  title  com- 
plementary appropriations  were  filled  out  with  dotted  lines. 
But  in  the  laws  of  regulation,  there  is  always  an  open  column, 
which  is  a  source  of  temptation.^  In  1906,  indeed,  143,128 
francs  reappeared  in  this  column.  The  evil  can,  therefore,  re- 
appear in  spite  of  the  interdiction  pronounced  in  1879  by  the 
Minister  of  Finance. 

It  is  not  surprising,  when  both  the  administrative  and  legis- 
lative branches  of  the  Government  support  the  system  of  com- 
plementary appropriations,  that  we  should  find  it  in  the  law 
of  1879. 

Besides,  certain  foreign  countries,  such  as  Belgium,*  em-  Belgium's 
ploy  it.    In  Belgium,  at  least  the  matter  is  regulated ;  the  com-  Experience 
plementary    appropriations    are    authorized    exclusively    for 
voted  operations,  for  estimated  appropriations,  which,  as  we 
know,  escape,  because  of  their  nature,  the  rigor  of  allotpients 

1  The  statement  of  supporting  arguments  of  the  plan  of  regulation 
for  the  fiscal  period  1889,  which  demanded  859,005.69  francs  of  com- 
plementary appropriations  to  be  applied  to  the  service  of  the  colonies, 
contains  interesting  disclosures  relating  to  the  subject  of  exceeding 
the  appropriations  for  the  colonies,  "which  the  Administration  of 
Finances  is  unable  to  prevent.  This  overspending  is,  therefore,  done 
outside  of  any  action  on  its  part.  .  .  ."  (Statement  of  January  17, 
1891.)  Since  then,  the  decree  of  May  16,  1891,  issued  for  the  pur- 
pose of  reorganizing  the  service  of  issuing  payment  vouchers  for  the 
colonies,  possibly  improved  the  situation. 

2  The  plan  of  January  18,  1895,  gives  an  entire  series  of  reasons 
tending  to  explain  why  "the  Government  sees  itself  'compelled'  to 
enter  the  road  of  complementary  appropriations." 

^  It  seems  that  a  legislative  motion  is  necessary  to  abolish  the 
column  opened  in  advance  in  the  bills  of  regulation  for  the  comple- 
mentary appropriations. 

*  In  Belgium  the  figure  of  complementary  appropriations  reaches 
each  year  the  sum  of  1,500,000  to  2,000,000  in  a  budget  of  400,000,000 
francs.  Other  additional,  extraordinary  and  supplementary  appro- 
priations amount  to  about  from  8  to  10,000,000,  according  to  the  fiscal 
period;  the  State  railways  are  always  the  principal  cause  for  the 
complementary  appropriations. 

363 


THE  BUDGET 

by  the  legislature.  In  Belgium,  there  can  be  no  indemnity  bill 
in  the  law  of  regulation  in  case  a  limited  appropriation  is  ex- 
ceeded. It  means  much  to  establish  any  regulatory  provision 
whatsoever  with  regard  to  such  matters. 

The  definition  of  complementary  appropriations  must  now 
be  formulated.  The  following  terms  show,  if  we  weigh  them, 
once  more  the  insidious  character  of  the  institution. 

"Complementary  appropriations  are  appropriations  made 
by  the  law  of  regulation,  in  order  to  cover  the  excesses  of 
expenditures  for  a  given  purpose." 


How  Annul- 
ments Arise 


Two 
Forms  of 
Annulments 


Annulments  of  Appropriations 

The  annulments  of  appropriations,  the  counterpart  of  addi- 
tional appropriations,  reduce  the  figures  of  the  original  budget 
instead  of  increasing  them.  They  may  be  defined  as  follows: 
"Annulments  strike  unused  appropriations  out  of  the  fiscal 
law." 

Failure  to  use  appropriations  results  from  two  causes : 

1 .  Time  was  lacking  during  the  fiscal  period  for  completing 
the  operation :  the  expenditure  of  course  was  macje,  but  the 
liquidation  of  the  expenditure,  its  vouchering  for  payment  or 
its  payment,  could  not  take  place  within  the  legal  space  of 
time. '  The  annulment,  in  this  case,  operates  as  a  routine  meas- 
ure to  carry  the  expenditures  forward  to  the  ensuing  fiscal 
period.  This  subject  will  be  treated  more  extensively  when 
we  discuss  the  closed  -fiscal  periods. 

2.  The  expenditure  has  not  Ijeen  made,  or  the  appropria- 
tion exceeds  the  needs  of  the  operation.  The  annulment  of 
the  unused  portion  of  an  appropriation  then  becomes  definite 
and  constitutes  a  real  saving  [from  the  viewpoint  of  the 
Treasury] . 

Thus,  we  have  two  categories  of  annulments:  the  first  is 
the  routine  annulment,  implying  the  carrying  forward  of  the 
appropriation  to  the  next  fiscal  period,  a  mere  shifting  of 
figures;  the  second  is  the  real  annulment,  which  involves  a 
definite  cancellation. 

Let  us  insist,  figures  in  hand,  on  this  distinction  between 
the  two  categories,  which  is  not  always  sufficiently  done  by 
the  statistical  tables  of  the  legislature,^  although  the  laws  of 

^  A  report  of  the  commission  on  budget  reads :  "The  annulments 
of  appropriations,  taking  the  average  for  the  last  five  fiscal  periods, 

364 


Practices 


ADDITIONAL  APPROPRIATIONS 

regulation  necessarily  furnish  positive  and  official  data.  Thus, 
the  regulation  plan  of  one  of  the  last  fiscal  periods  shows  an- 
nulments of  116,814,754  francs  to  be  deducted;  the  regulation 
plan  divides  this  sum  into  three,  which,  combined  into  two 
for  the  sake  of  clearness,  contains  on  the  one  hand  18,880,000 
francs  of  routine  annulments  and  97,934,000  of  definite  annul- 
ments. 

The  fiscal  period  in  question,  thus  furnished  in  definite  an- 
nulments, that  is  in  savings,  almost  98,000,000,  which  ex- 
ceeds by  far  the  usual  average  of  from  50  to  60,000,000 
francs.^ 

One  of  the  main  causes  for  errors  in  the  legislative  statis- 
tics or  other  statistics  prepared  in  the  course  of  the  fiscal 
period — before  the  passing  of  the  law  of  regulation — results 
from  the  bad  practice  followed  in  connection  with  the  plans 
for  additional  appropriations.  This  practice  is  to  deduct  at 
once  the  total  of  annulments,  in  order  to  cause  less  concern 
by  submitting  to  the  legislature  a  net  total,  and,  therefore,  a  Deceptive 
reduced  total  of  additional  appropriations,  resulting  from  the 
subtraction  of  annulments.  The  latter  serve  the  purpose  of 
helping  to  pass  additional  appropriations.  This  procedure  has 
regrettable  analogies  to  that  of  the  old  transfers  of  1861.  Al- 
though possibly  regular  as  to  form,  it  is  much  less  regular 
as  to  intention.  Why  anticipate  the  natural  order  and  be  in 
haste  with  regard  to  using  the  annulments?  Why  not  reserve 
them  all  for  the  law  of  regulation?  Because  there  is  hope  of 
deceiving  the  legislature.^  Not  only  is  the  abuse  of  supple- 
amount  yearly  to  70,200,000  francs."  (Chamber  of  Deputies,  budget 
for  1890,  report  of  March  23,  1889.)  Another  report  almost  contem- 
poraneous with  the  former  reads :  "The  annulments  of  appropria- 
tions amount  on  the  average  every  year  to  40  or  50,000,000  francs." 
(Chamber  of  Deputies,  March  8,  1890.)  These  discrepancies  prove 
to  what  extent  the  figures  are  interpreted  differently  according  to 
whether  the  financial  documents  are  used  as  references  with  more 
or  less  discrimination. 

^  Definite  annulments  ascertained  "at  the  close"  of  fiscal  periods 
by  the  laws  of  regulation: 

Fiscal  Fiscal 

Period  "  Period 

1892  46,500,000  francs  1904  39,044,000  francs 

1893  49,900,000      "        1905  73,480,000      " 

1902  46,056,000      "        1910  112,911,000      " 

1903  49,549,000      " 
Apart  from  the  two  last  regulated  fiscal  periods,  we  see  that  the 

average  did  not  reach  even  the  amount  of  50,000,000  francs. 

2  These  bills  express  it  as  follows :     "The  annulments  hereinafter 

365 


THE  BUDGET 

mentary  appropriations  favored,  but  the  administrations  avail 
themselves  of  the  opportunity  to  exaggerate  in  advance  their 
demands  for  original  appropriations  in  order  later  to  procure 
for  themselves  large  annulments  [credit  for  an  apparent 
saving] } 

Be  that  as  it  may,  the  total  of  annulments  scattered  through 
the  demands  for  additional  appropriations,  including  those 
which  are  reserved  for  the  lot  de  reglement,^  never  reaches  a 
considerable  figure,  and  it  can  be  safely  said,  not  even  a  suffi- 
cient figure — two  or  two  and  one-half  per  cent,  of  the  grand 
total  of  expenditures  at  the  most.^    The  additional  appropria- 

mentioned  have  the  purpose  of  offsetting  the  increases  of  appropria- 
tions demanded  elsewhere." 

^  A  report  of  the  commission  on  finances  of  the  Senate  describes 
these  maneuvers  as  follows:  "The  administrations  often  make  the 
legislature  incur  an  expenditure  by  demanding  an  entire  appropria- 
tion; the  administrations  are  perfectly  well  aware  of  the  fact  that 
the  expenditure  cannot  all  be  disbursed  in  the  course  of  the  year  and 
they  therefore  more  easily  obtain  the  carrying  forward  of  this  ex- 
penditure. .  .  .  This  carrying  forward  and  the  annulments  corre- 
sponding to  the  former,  thus  reach  too  high  a  proportion.  .  .  .  This  is 
not  a  procedure  of  good  financial  management.  .  .  .  These  annul- 
ments and  the  carrying  forward  upset  the  accounting  and  .alter  the 
appearance  of  the  fiscal  period  .  .  .  etc."  (Report  of  M.  Boulanger, 
June  24,  1890.) 

More  recently  M.  Raymond  Poincare,  in  a  report  to  the  Senate  of 
November  21,  1907,  wrote  as  follows:  "The  annulments  suggested 
in  the  course  of  the  fiscal  period  are,  generally  speaking,  submitted 
as  a  counterpart  and  as  a  ransom  for  the  demanded  supplementary 
appropriations.  This  cloud  of  dust  of  the  annulments  seems  to  be 
made  for  the  purpose  of  blinding  the  Chambers  with  regard  to  the 
real  extent  of  the  increases.  It  would  be  much  better  not  to  crumble 
up  the  annulments  like  this  and  to  present  them  en  bloc/'  unless, 
it  goes  without  saying,  there  is  a  complete  correlation  between 
the  abolished  appropriation  and  the  newly  demanded  appropria- 
tion. 

-  The  annulments  in  the  course  of  the  fiscal  period  amount  at  times 
to  half  of  the  annulments  at  the  time  of  the  regulation  of  the  fiscal 
period.  The  following  retrospective  table  shows  the  above  conten- 
tion: 


Fiscal 

Periods 

1890 

1891 

1892 

1897 

In  the  course  of 
the  fiscal  period 

29 

30 

32 

20 

At  the  time  of 
the  regulation 

68 

66 

46 

56 

Totals 
97,000,000  francs 
96,000,000       " 
78,000,000       " 
76,000,000       " 

^  The  article  "annulments"  in  the  Dictionnaire  des  finances  states 
that  this  proportion  was  on  the  average  2.47  per  cent  under  the  Mon- 

366 


ADDITIONAL  APPROPRIATIONS 

tions  during  the  same  time  often  go  up  as  high  as  5  per  cent, 
of  the  grand  total.  Why  do  the  original  estimates  always  fall 
short  with  regard  to  increases  rather  than  to  reductions? 
Do  not  the  estimated  endowments  for  each  chapter  have  al- 
most as  good  a  chance  to  exceed  the  needs  as  to  be  insufficient, 
when  the  actual  expenditures  amount  to  over  4,000,000,000? 
Unfortunately,  as  we  have  said,^  the  administrations,  bent  on 
exhausting  their  appropriations,  are  little  inclined  to  make 
annulments,  but  on  the  contrary  seek  additional  appropria- 
tions. Some  day  a  stricter  control  may  succeed  in  saving,  for 
the  benefit  of  the  equilibrium  of  the  budget,  the  excessive  ap- 
propriations of  which  it  is  now  deprived. 

Results  of  the  Regulation  of  Additional  Appropria- 
tions 

If  the  laws  of  1871  and  of  1879  performed  a  real  service  The 
by  putting  the  authorization  of  additional  appropriations  in  Stewardship 
the  hands  of  the  legislature,  did  they  at  the  same  time  perform  Legislature 
effective  work  ?    This  brings  up  the  question  as  to  whether  the 
Chambers  wisely  use  their  powers.     As  their  rights  cannot  be 
contested,  the  wisdom  of  the  Chambers  becomes  only  a  con- 
tingent matter.     Regardless  of  the  results  obtained,  the  prin- 
ciples of  the  laws  of  1871  and  of  1879  will  always  preserve 
their  authority. 

Several  periods  must  be  distinguished  since  187 1.  First, 
that  to  1878,  which  we  shall  disregard.  Then  comes  the  period 
from  1879  to  1886,  remarkable  for  its  heavy  increases.  A 
table  of  additional  appropriations  (without  subtracting  the 
annulments)^  is  sufficient  to  show  the  above  contention. 


Original  Budgets 

Additional  Appropriations 

1879 

2,700,000,000 

251,000,000 

1880 

2,750,000,000 

147,000,000 

I88I 

2,763,000,000 

270,000,000 

archy  of  July,  2.09  per  cent  from  1848  to  1851  and  1.88  per  cent  from 
1852  to  1869. 

^  The  complementary  period  of  the  fiscal  period  supplies  them  with 
means.     See  Chapters  V  and  XXVI. 

2  These  statistical  figures  are  taken  from  the  report  of  the  com- 
mission on  finances  of  the  Senate,  of  March  21,  1888.  They  were 
also  printed  in  the  Bulletin  de  statistique  du  ministere  des  finances 
(issue  for  the  month  of  April,  1888). 

367 


THE  BUDGET 


Original  Budgets 

Additional  Appropriations 

i88p 

2,854,000,000 

239,000,000 

1883 

3,044,000,000 

202,000,000 

1884 

3,025,000,000 

1 70,000,000 

1885 

3,002,000,000 

376,000,000 

Better 
Results 


Thus,  after  the  fiscal  law  was  voted,  new  needs,  extending 
l)eyond  the  original  appropriations,  appeared,  involving 
amounts  exceeding  for  one  year  200,000,000,  250,000,000, 
270,000,000  and  going  as  high  as  376,000,000  in  1885.^ 
These  transgressions  have  given  rise  to  unanimous  protests, 
which  found  an  echo  in  the  commissions  on  budget  and  which 
soon  brought  about  a  wholesome  reaction. 

In  the  period  from  1887  to  1892,  the  additional  appropria- 
tions were  considerable,  but  less  than  those  of  earlier  years; 
the  annulments,  therefore,  began  to  equal  and  even  to  exceed 
them;  this  is  the  logical  situation  which  we  extolled  above. 
The  statistical  figures  ^  are  quite  eloquent  in  this  connection : 


Fiscal  Periods 

Additional  Appropriations 

Annulments 

Francs 

Francs 

1887 

58,000,000 

62,000,000 

1888 

92,000,000 

100,000,000 

1889 

76,000,000 

88,000,000 

1890 

86,000,000 

97,000,000 

Possibilities         Thus,  where  the  determination  was  present,  the  additional 
t^  ^h  appropriations  decreased  for  several  years  in  succession ;  they 

became  less  than  the  total  of  annulments,  leaving  the  figures 

of  the  original  budget  intact,  as  a  whole. 


"This  table  shows  that  as  soon  as  the  legislature  and 
the  Government  resolved  on  retrenchment,  the  supple- 
mentary appropriations  decreased.  During  the  four 
years,  1887  to  1890  inclusive,  corresponding  to  the  re- 

1  One  of  the  principal  causes  of  the  enormous  figure  of  supple- 
mentary appropriations  in  1885  is  the  expedition  to  Tonkin  which, 
financed  from  day  to  day,  demanded  in  succession  very  considerable 
supplements  in  the  course  of  the  fiscal  period.  In  1883  and  1884  the 
campaign  in  Madagascar,  the  occupation  of  Tunis  and  the  beginning 
of  the  occupation  of  Tonkin  exercised  an  analogous  influence  upon 
the  supplementary  appropriations. 

2  These  figures  are  taken  from  the  report  relating  to  the  budget 
for  the  fiscal  period  1896.    (Chamber  of  Deputies,  October  28,  1895.) 

368 


ADDITIONAL  APPROPRIATIONS 

trenchment  period,  the  annulments  exceeded  the  supple- 
mentary appropriations.  After  1891,  the  reverse  situa- 
tion obtained.  ..." 

Thus  the  evil  reappeared.^ 


Fiscal  Period 

Additional  Appropriations 

Annulments 

1900 

'  160,939,000 

50,551,000 

1901 

144,6514,000 

57,978,000 

1905 

113,151,000 

73,482,000 

1909 

211,009,000 

65,687,000 

1910 

218,950,000 

118,911,000 

1911 

205,355,000 

This  disquieting  return  of  additional  appropriations  is 
alarming,  not  only  because  of  its  totals,  but  because  of  the 
abuses  shown  by  the  details  furnished  by  the  statements  and 
reports. 

Let  us  cite  as  an  example  a  building  "in  the  most  deplorable  Some  illus- 
condition;  the  v^ater  has  penetrated  into  the  large  room  and  Abuses^  ° 
has  decayed  a  part  of  the  wainscoting ;  the  plastering  and  the 
brickwork  are  damaged;  the  gutters  and  the  sheet  iron  blinds 
are  corroded ;  the  water  pipes  are  broken.  ..."  Immediately 
the  question  arises  as  to  how  it  happened  that  such  long-stand- 
ing and  considerable  deterioration  was  discovered  so  suddenly 
in  the  course  of  the  fiscal  period?  How  was  it  possible  that 
it  should  have  gone  unnoticed  so  long?  In  a  word,  is  it  not 
probable  that  the  original  budget  was  in  a  position  to  antici- 
pate the  necessity  of  such  repairs?  In  the  same  way,  the 
Ministry  of  Justice  suddenly  discovers  that  "its  floors  are 
sunk  in,  that  the  main  shafts  of  its  chimneys  are  cracked  and 
threatening  the  buildings  with  the  danger  of  fire,  etc."  (Plan 
of  December  8,  1889),  and  urges  an  additional  appropriation. 
In  1907,  the  Ministers  of  Public  Instruction,  of  Foreign  Af- 
fairs and  of  the  Interior  claimed  that  their  "heating  apparatus 
presents  a  permanent  danger  to  the  security  of  the  building 
and  the  health  of  the  officials,  that  the  roofing  leaks  and  that 
the  wooden  ]x)ards  of  the  roof  are  partly  decayed  and  show 
alarming  depressions,  and  the  chimney  shafts  are  almost  im- 

^  These  figures  are  taken  from  the  report  of  Senator  Raymond 
Poincare  of  November  21,  1907,  from  the  statement  of  supporting 
arguments  of  the  budget  for  191 3  and  from  the  general  financial 
account. 

369 


in  Practice 


THE  BUDGET 

possible  to  use,  etc." ;  all  these  things,  strange  to  say,  were  un- 
known, in  spite  of  their  gravity  and  their  long  existence,  at 
the  time  of  preparing  the  original  budget. 
Deception  The  administration  of  the  posts  also  pretended  to  have 

overlooked,  while  preparing  the  budget  for  1893,  that  a  gen- 
eral election  set  by  the  Constitution  was  to  take  place  that 
year.  At  the  last  moment,  therefore,  it  demanded  a  supple- 
mentary appropriation  of  682,000  francs  for  the  customary 
increase  of  work  of  its  agents  during  this  period,  which  in- 
crease occurs  at  intervals  provided  for  by  the  constitution. 

In  1903,  the  Senator  reporting  on  the  budget  stated  that 
"no  unforeseen  event — except  the  Martinique  disaster,  which 
required  an  appropriation  of  only  a  little  over  3,000,000 — had 
occurred  in  1902.  New  suggestions,  however,  brought  the 
figure  of  supplements  for  this  fiscal  period  to  92,273,000 
francs."  Regularly  each  year,  supplementary  appropriations 
are  demanded  by  the  ministry  of  foreign  affairs  for  ex- 
penditures on  telegraphic  correspondence ;  this  is  a  deep-rooted 
evil  against  which  the  commissions  on  budget  protested  in 
vain.  The  same  is  the  case  with  the  expense  of  establishing 
new  diplomatic  and  consular  agencies.^  A  commission  has 
been  charged  with  devising  a  plan  to  correct  these  abuses, 
which  in  the  meantime  are  not  abandoned. 

The  purchase  and  transportation  of  tobacco,  the  remit- 
tances to  holders  of  collectorships,  the  premiums  to  silk-worm 
growers,  the  remittances  to  officers  of  the  town-dues,  the 
transportation  of  convicts,  etc. — all  expenditures,  the  nature 
of  which  we  have  explained  under  the  heading  of  estimated 
appropriations,  seem  to  be  intentionally  reduced  in  the  origi- 
nal budget  estimates  below  their  probable  amount  and  must 
necessarily  come  back  again  and  again  in  the  memoranda  for 
additional  appropriations.  "It  is  impossible  to  "refuse  the 
payment  of  debts  which  are  due  by  virtue  of  existing  laws, 
which  sums  constitute  salaries  or  reimbursements  to  cred- 
itors." 

^  "The  administration  of  foreign  afifairs  seems  to  have  acquired  the 
habit  of  considering  the  supplementary  appropriations  as  a  normal 
resource.  .  .  .  This  administration  submits  to  reductions  of  its 
budgetary  appropriations  without  opposing  such  action  save  by  mild 
protests,  because  in  order  to  get  out  of  trouble  it  may  have  recourse 
to  supplementary  appropriations,  which,  as  a  rule,  are  submitted  to 
a  less  rigid  examination."  (Report  of  the  commission  on  budget. 
Chamber  of  Deputies,  July  11,  1889.) 

370      


ADDITIONAL  APPROPRIATIONS 

The  administration  of  forests  in  former  times  regularly  sub- 
mitted in  its  original  plans  a  figure  for  contributions  to 
domanial  forests  less  than  the  real  total,  being  perfectly  sure 
that  the  supplement  necessary  for  the  salary  of  the  collector 
would  not  be  refused.     (Session  of  March  28,  1889.) 

In  1890,  at  the  time  of  the  enlargement  of  the  Conservatory 
of  Arts  and  Crafts,  a  supplementary  appropriation  of  606,190 
francs  was  demanded : 


Deliberate 
Delays  and 
Deceptions 


"The  necessity  for  the  expenditure  had  been  known 
since  1886.  The  Executive  should  have  demanded  the 
entering  of  this  expenditure  in  the  ordinary  budgets.  By 
failing  to  do  this,  the  Government  barred  the  way  to  sub- 
sequent additional  appropriations.  .  .  .  The  commission 
does  not  hesitate  to  suggest  the  rejection  of  this  demand 
as  an  additional  appropriation."  (Report  to  the  Senate  . 
of  June  24,  1890.)  For  a  long  while  the  original  budget 
of  the  Navy  was  "only  a  skeleton,  which  was  completely 
disfigured  by  supplementary  appropriations  and  annul- 
ments ;  at  the  end  of  the  fiscal  period,  this  skeleton  budget 
could  no  longer  be  recognized."  (Session  of  the  Senate 
of  December  20,  1893.) 

We  could  multiply  these  citations,  which  unfortunately  are   Admission 
numerous.^     The  Minister  of  Finance  did  not  hesitate  to  de-  °^  Abuses 
clare,  because  of  the  urgent  complaints  emanating  from  the 
commission  on  budget :  ^ 


"There  are  some  financial  practices  which  you  are  quite 
right    in    condemning,    and    which   the   commission    on 

^  Let  us  add,  in  order  to  excuse  our  Government  to  a  certain  extent, 
that  these  irregularities  have  been  more  or  less  practiced  at  all  times. 
We  see  them  pointed  out  even  under  the  Restoration.  (See  particu- 
larly the  report  of  Count  Daru  to  the  Chamhre  des  Pairs,  relating 
to  the  regulation  of  the  budget  for  1826,  July  23,  1828,  pages  38  and 
following.  Only,  as  we  have  said  above,  it  is  a  question  of  these 
irregularities  occurring  more  or  less. 

2  The  only  reassuring  feature  of  the  actual  situation  lies  precisely 
in  the  vigilance  continuously  manifested  by  the  commissions  on 
budget.  In  the  rigor  of  the  control  by  the  commissions  on  budget 
lies  the  only  obstacle  to  the  tide  of  additional  appropriations.  The 
Minister  of  Finance,  however,  is  enabled  by  his  personal  authority, 
by  his  ferocity  if  he  is  not  afraid  to  show  it,  to  oppose  additional 
appropriations  at  their  very  source,  which  is  a  very  efficacious  way, 
as  was  seen  from  1887  to  1890. 

37^^ 


THE  BUDGET 

finances  is  in  duty  bound  to  condemn;  I  would  add  fur- 
ther that  it  is  the  duty  of  the  Minister  of  Finance  to  stop 
these  practices.  .  .  .  Most  regrettable  irregularities  have 
been  committed.  .  .  .  We  are  trying  to  prevent  their  be- 
ing renewed  .  .  .  because  they  are  real  abuses." 


Responsi- 
bility 
Fixed 


This  review  of  the  progress  of  additional  appropriations, 
from  the  passing  of  the  new  laws  of  1871  and  1879,  shows 
what  use  the  legislature  can  make  of  its  sovereign  authority. 
After  having  at  first  yielded  to  the  temptation,  it  almost  re- 
formed, only  to  fall  back  into  its  old  error  and  to  free  itself 
again.  All  depends  on  the  wisdom  of  the  legislature;  experi- 
ence, however,  shows  that  this  wisdom,  like  that  of  a  human 
being,  is  uncertain  and  subject  to  lapses  followed  by  whole- 
some revivals. 

The  supreme  authority  of  the  representatives  of  the  country 
certainly  does  not  constitute  an  ultimate  or  even  an  immediate 
remedy.  But  it  places  the  responsibility  on  the  right  parties. 
If,  in  the  plenitude  of  its  power,  the  legislature  makes  a  mis- 
take, it,  at  least,  has  the  right  to  make  a  mistake;  and  all 
things  considered,  it  may  safely  be  said  that  the  legislature 
is  likely  to  make  smaller  blunders  than  the  Executive,  in  case 
the  latter  were  left  alone. 


Additional  Appropriations  in  Foreign  Countries 


Italian 

Experience 

Satisfactory 


In  Italy — with  the  corrective  budget,  including,  as  we  know, 
all  the  supplements  which  become  necessary  in  the  middle  of 
the  fiscal  period — only  now  and  again  is  resort  had  to  addi- 
tional appropriations.  The  original  Italian  budget  includes 
special  chapters  for  unforeseen  expenditures,  one  of  which  is 
called  "reserve  fund  for  obligatory  and  routine  expenditures," 
another,  "reserve  fund  for  unforeseen  expenditures." 
(Article  38  of  the  law  of  1884.)  The  deductions  from  the 
first  chapter  concern  the  "obligatory  and  routine"  expendi- 
tures, a  list  of  which  is  attached  to  the  annual  budget  law  and 
which  can  be  made  regular  by  a  simple  decision  of  the  Minister 
of  the  Treasury,  registered  with  the  Coiir  des  Comptes.  The 
deductions  from  the  second  chapter,  for  "unforeseen  expendi- 
tures," are  operated  by  means  of  royal  decrees,  which  are  dis- 
cussed by  the  Cabinet  at  the  suggestion  of  the  Minister  of 
the  Treasury;  they  are  then  registered  with  the  Cour  des 


ADDITIONAL  APPROPRIATIONS 

Comptes  aiid  published  in  the  Journal  oiHciel.     When  in  ses- 
sion, the  legislature  alone  authorizes  these  deductions. 

In  Belgium,  the  additional  appropriations  appear  either  in 
the  course  of  the  fiscal  period  or  in  the  law  of  regulation  and 
have  the  name  of  complementary  appropriations.  M.  Graux, 
former  Minister  of  Finance,  in  the  Liberal  Cabinet  acknowl- 
edged that  from  1878  to  1884,  during  his  incumbency,  the 
average  of  these  complementary  appropriations  under  his  lead- 
ership had  amounted  to  8,000,000  francs.  (Belgian  Senate,  Satisfac- 
session  of  April  27,  1888.)  These  8,000,000  represented  a  su^^g'^n" 
little  less  than  three  per  cent,  of  the  total  budget  of  about  Belgium 
300,000,000.  The  Minister  of  Finance  in  1883  said:  "The 
lesson  resulting  from  a  recurring  experience  is,  that  no  matter 
what  is  done,  supplementary  appropriations  are  always  neces- 
sary. As  a  consequence,  this  eventuality  should  be  taken  into 
account  when  the  estimates  of  revenues  are  made."  (State- 
ment of  the  Minister  of  Finance,  February  2,  1883.)  For 
several  years,  however,  these  supplements  have  shown  a 
tendency  to  disappear.  The  Minister  of  Finance,  M.  Beer- 
naert,  said: 

"The  fiscal  period  of  1886  has  been  encumbered  with 
expenditures,  some  exceptional  and  some  new.  There 
were  also  heavy  military  expenditures,  necessitated  by  the 
sad  events  of  March,  1886.  In  spite  of  these  new  ex- 
penditures, we  not  only  did  not  ask  for  supplementary 
appropriations,  but  the  unexpended  appropriations  to  be 
returned  to  the  Treasury  will  reach  the  considerable  sum 
of  5,420,699  francs."  (Chamber  of  Representatives,  ses- 
sion of  November  9,  1887.) 

Later  M.  Beernaert  confirmed  these  data.  "The  fiscal  periods 
— 1885,  1886  and  1887 — instead  of  compelling  us  to  demand 
supplementary  appropriations  as  was  predicted  by  the  Left, 
after  all  accounts  were  settled,  left  a  surplus  of  almost  5,000,- 
000  per  year  to  be  returned  to  the  Treasury."  (Senate,  April 
27,  1888.  )i 

It  cannot  be  said,  therefore,  that  supplementary  appropria-  Railroads 
tions  completely  disappeared  in  Belgium ;  they  were  only  held  ^^a^Jong*" 
back.     The  State  railways  demand  and  will  probably  always 

^  See  on  the  subject  of  the  precision  of  estimates  in  Belgium  the 
statistical  tables  published  in  the  Bulletin  du  ministere  des  finances, 
June,  1889. 

373 


THE  BUDGET 


Experience 
in  Prussia 


Russian 
Experience 
Unsatis- 
factory ' 


demand  some  increases  in  the  course  of  the  fiscal  period  on 
account  of  the  uncertainty  inherent  in  their  annual  traffic;  this 
is  to  leave  out  of  count  public  works,  public  instruction,  etc.^ 

In  the  same  way,  the  railroads  of  Prussia  cannot  fail  to  call 
for  additional  appropriations,  particularly  if  their  operating 
costs  are  added  to  expenditures  for  construction,  as  was  the 
case  in  April,  1889,  when  a  plan  to  enlarge  the  system,  to 
build  stations,  storehouses,  etc. — amounting  to  187,500,000 
francs — formed  the  supplementary  budget  for  the  fiscal  period. 

The  German  Empire  avoids  this  plague  as  much  as  pos- 
sible. For  the  fiscal  period  1908- 1909,  the  statement  of  the 
Secretary  of  the  Treasury,  M.  Stengel,  referring  to  the  re- 
sults of  the  preceding  fiscal  period,  was  in  position  to  state : 

*The  Army  and  the  Navy,  which  in  former  times  were 
included  within  the  limits  of  the  budget,  have  shown  this 
year  only  very  unimportant  violations  of  their  respective 
appropriations.  The  other  administrations  have  tried  to 
keep  within  their  appropriations.  .  .  .  The  only  excep- 
tions are  with  regard  to  the  public  debt,  because  of  an 
issue  of  Treasury  bonds ;  and  the  post,  the  operating  ex- 
penses of  which  have  increased." 

In  Russia,  where  parliamentary  initiative  could  not  hitherto 
be  blamed  for  having  exercised  sinister  influences,  the  sup- 
plementary appropriations  for  a  long  time  have  reached  pro- 
portions which  the  Executive  denounced  as  regrettable.  The 
Comptroller  General  presented  the  following  list  of  supple- 
mentary appropriations  in  his  annual  report  under  the  title. 
Supplementary  appropriations  after  subtraction  of  expendi- 
tures relating  to  the  war  in  the  East:" 


1876 
1879 
1880 
1885 
1887 


21,616,000  roubles 
38,657,000       " 
56,200,000      " 
34,700,000      " 
49,601,000       " 


1  Thus  the  plan  for  supplementary  appropriations  of  December  12, 
1899,  amounted  in  Belgium  to  17,227,000  francs,  7,000,000  of  which 
were  allotted  to  the  ministry  of  war,  8,041,000  to  the  railroads,  etc. 
In  1903  the  plan  of  July  7  suggested  the  making  of  10,723,000  francs 
of  supplementary  appropriations  for  ten  ministries  or  branches  of 
the  service.  In  1905  the  plan  of  May  12,  1905,  contained  7,742,000 
francs  of  supplementary  appropriations,  etc. 

374 


ADDITIONAL  APPROPRIATIONS 

In  1890,  the  Minister  of  Finance  declared :     "In  accord-  Some 
ance  with  the  will  of  Your  Imperial  Majesty,  no  expendi-  p^f^^^" 
tiires  outside  of  the  budget  shall  be  admitted,  and  as  a  re- 
sult thereof  the  total  of  the  appropriations  of  the  budget  shall 
not  be  exceeded."     (Report  of  M.  de  Wischnegradsky,  Minis- 
ter of  Finance  to  the  Tsar,  January  10,  1890.)     The  sum- 
mary of  the  fiscal  period,  1889,  had  already  shown  the  excep- 
tional fact  that  the  expenditures  were  3,074,000  roubles  less 
than  the  estimates;  no  extraordinary  appropriation  had  been 
made  during  the  year,  without  there  having  resulted  a  corre- 
sponding economy.     The  settlement  of  one  of  the  last  fiscal 
periods  showed  a  surphis  of  9,974,487  roubles  over  the  esti- 
mated expenditures ;  the  Comptroller  of  the  Empire'  hastened 
to  explain  that  "this  discrepancy  between  the  disbursed  expen- 
ditures and  the  budgetary  estimates  merely  indicated  that  the 
Imperial  Treasury  had  not  for  a  moment  lost  sight  of  its  pur- 
pose to  keep  within  the  appropriations  of  the  fiscal  law."    For 
the  fiscal  period,  1903,  the  last  one  closed  prior  to  the  Russo-  n 
Japanese  War,  the  expenditures  of  the  ordinary  budget,  esti- 
mated at  5,000,000,000  francs,  reached  the  sum  of  5,008,000,- 
000,  an  insignificant  increase  of  0.16  per  cent.     A  thing  not 
to  be  forgotten  is,  that  the  vote  by  the  legislature  did  not  exist  "^ 
in  Russia  at  these  different  dates,  and  that  the  Government 
had  the  power  to  grant  itself  large  original  appropriations. 
[The  recent  cataclysmic  revolution  in  Russia  will  doubtless  English 
call  into  existence  a  new  financial  regime.]  Estimates 

In  England,  until  the  South  African  War,  the  budgetary 
supremacy  of  Parliament  had  produced  an  effective  resistance 
against  additional  appropriations;  this  resistance  is  inherent 
in  the  budgetary  supremacy  of  Parliament.  This  is  empha- 
sized, for  the  English  administrations  on  their  own  behalf  use 
the  most  painstaking  care  to  prepare  the  Estimates  so  that 
they  will  not  be  contradicted  by  the  facts  [as  developed  while 
they  are  under  discussion].  "The  administrations  entrusted 
with  preparing  the  English  Estimates  consider  it  a  particular 
honor  to  have  estimated  accurately,"  reported  a  French  in- 
spector, sent  on  a  mission  to  England.  In  France,  on  the  con-  ^ 
trary  [where  the  estimates  are  prepared  so  long  in  advance], 
the  administrations  are  often  proud  of  their  ability  to  do  the 
opposite  thing.  Correlatively  with  the  above,  the  English 
Chambers  regard  with  impatience  and  even  with  distemper  any 
changes  made  subsequently  in  the  Estimates.     In  an  article 

375         .. 


THE  BUDGET 


Supple- 
mentary 
Estimates 


Votes  of 
Credits 


in  the  Dictionnaire  de  la  politique,  devoted  to  the  English 
budget,  Sir  Stafford  Northcote,^  former  Chancellor  of  the  Ex- 
chequer, says:  "The  principle  underlying  the  appropriation 
act  is  that  no  more  funds  can  be  allotted  to  a  particular  opera- 
tion than  are  specified  in  the  vote  relating  to  it.'*  As  we  see, 
there  is  a  tendency  to  respect  the  original  figures  as  much  as 
possible.  Supplementary  needs,  however,  cannot  be  avoided. 
How  are  they  regulated  and  what  is  their  importance  ?   - 

When  needs  of  urgent  and  exceptional  nature  arise  for  the 
Army  and  for  the  Navy,  the  English  accounting  provides  for 
them  by  means  of  either  supplementary  estimates  or  votes  of 
credits.  Each  of  these  systems  is  put  in  practice,  according  to 
the  circumstances.  H  the  Estimates  relating  to  military  af- 
fairs turn  out  to  be  close  to  the  facts,  in  order  that  it  may  be 
possible  to  calculate  the  expenditures  in  its  details  and  its 
subdivisions  by  chapter,  the  supplementary  estimates  are  pre- 
ferred. If,  on  the  contrary,  the  nature  of  the  enterprise  or 
the  time  which  must  elapse  between  the  estimating  and  the 
making  of  the  expenditure  leaves  its  repartition  by  chapter  in 
doubt,  a  single  appropriation  is  granted  under  a  vote  of 
credit.'^  The  principle  of  accountability,  as  applied  in  Eng- 
land, attaches  much  importance  to  the  distinction  between  the 


y 


^  Sir  Stafford  Northcote  remarks,  however,  that  until  1862  the  right 
of  making  transfers  from  one  chapter  to  another  existed  within  cer- 
tain limits.  In  1862  this  possibility  of  making  transfers  was  abol- 
ished. The  Government  still  has  the  right  to  use  the  surpluses  of 
certain  chapters  in  urgent  cases  in  order  to  provide  for  unforeseen 
expenditures,  but  then  the  Government  acts  on  its  own  responsibility 
and  its  initiative  must  be  backed  up  by  the  voting  of  an  indemnity 
bill.  Thus,  in  1885,  when  the  Government  in  the  month  of  April  de- 
manded several  large  supplementary  appropriations,  one  for  the  ex- 
pedition to  the  Soudan,  another  for  preparations  for  a  war  with 
Russia  and  a  third  for  various  purposes,  Mr.  Childers,  Chancellor  of 
the  Exchequer,  admitted  in  the  course  of  the  discussion  that  because 
of  the  urgency  more  than  half  of  the  total  demanded  sum  had  been 
already  incurred  or  disbursed.  The  carrying  forward  of  appropria- 
tions from  one  year  to  the  next  is  at  present  forbidden  for  the  same 
reason  as  are  the  transfers. 

2  These  votes  are  confidence  votes,  as  Sir  Stafford  Northcote  truly 
said  in  his  article.  "In  order  to  meet  extraordinary  and  urgent  ex- 
penditures of  the  war,  it  is  customary  to  pass  a  confidence  vote  for 
several  millions  of  pound  sterling  which  cannot  be  used  for  any  other 
purpose.  But  besides  these  confidence  votes,"  adds  the  eminent  author, 
"if  needs  for  funds  manifest  themselves.  Parliament  should  be  con- 
vened and  a  demand  for  supplementary  appropriations  be  submitted 
to  it." 


376 


v^ 


ADDITIONAL  APPROPRIATIONS 

two  systems  ^ — attempts  having  been  made  to  limit  the  votes 
of  credit  to  exceptional  events.^    Thus,  in  1872,  with  regard    J 

^  The  supplementary  estimates  and  the  votes  of  credit  have  been 
defined  and  described  as  follows  in  the  reports  of  the  committee  on 
public  accounts:  'Your  committee  has  come  to  the  conclusion  that  in 
all  cases  of  a  special  operation,  when  the  administrative  department 
is  able  to  furnish  a  sincere  and  definite  estimate  of  the  operation  and 
of  all  the  principal  chapters  to  which  the  expenditure  shall  relate,  it 
is  desirable  that  a  "supplementary  estimate"  be  suggested  and  that 
"votes  of  credit"  be  reserved  for  circumstances  in  which  it  becomes 
very  difficult,  if  not  impossible,  to  give  a  sufficiently  approximate  esti- 
mate of  the  anticipated  needs  and,  as  a  consequence,  it  is  preferable 
to  await  the  materializing  of  facts.  The  vote  of  credit,  as  has  already 
been  said,  is  not  divided  into  sub-chapters,  but  they  do  not  apply  to 
any  special  department.  Thus,  although  the  Treasury  decided,  in  con- 
formity with  the  recommendations  of  the  committee  of  public  ac- 
counts of  1879  that,  regardless  of  the  extent  of  the  vote  of  credit  only 
amounts  actually  and  directly  disbursed  by  the  departments  for  the 
purpose,  for  which  this  vote  of  credit  had  been  voted,  be  charged 
against  the  latter,  the  authorities  of  the  department  of  the  army  and 
of  the  admiralty  always  had  the  greatest  difficulty  in  conforming  with 
this  decision.' 

*As  far  as  the  supplementary  estimates  are  concerned,  they  are 
divided  into  sub-chapters  and  therefore  give  much  more  precise  in- 
formation to  Parliament.  The  Treasury  controls,  in  a  more  extended 
way,  the  operations  of  the  administrative  departments  after  the  opera- 
tion has  been  carried  out,  and  no  transfer  of  appropriations  from  one 
sub-chapter  to  another  can  take  place  without  the  Treasury's  authori- 
zation. 

'At  the  same  time,  it  is  necessary,  that  the  total  of  the  estimate  of 
every  extraordinary  operation  be  clearly  exposed  to  Parliament  and 
your  committee  expressed  the  opinion  that  the  system  of  supplemen- 
tary estimates,  more  valuable  for  the  security  of  the  control  and  of 
the  giving  of  accounts,  shall  be  made  to  agree  with  the  obligation 
always  to  present  to  Parliament  a  complete  view  of  the  best  possible 
estimate  of  the  total  of  the  expenditure  of  the  extraordinary  opera- 
tion.' {Handbook  to  the  reports  from  the  committees  of  public  ac- 
counts, March,  1888.) 

2  Although  exceptional  because  of  their  nature,  these  events  are 
none  the  less  frequent  in  the  history  of  England;  the  war  in  China, 
the  Crimean  war,  the  Indian  Mutiny,  the  events  of  1870-1871,  the  war 
in  Abyssinia,  the  South  African  expedition,  the  Afghanistan  affair, 
the  danger  of  war  with  Russia,  the  occupation  of  Egypt,  etc.  Votes 
of  credit  were  specially  made  for  the  following  purposes: 
Ashantee  War  1874  ,    20,009,000  francs 

Ashantee  War  1875  3,120,000 

Ashantee  War  1877  50,000      " 

Russo-Turkish  War  1878  87,500,000      " 

Military  Operations  1886  236,275,000      " 

Transvaal  War  1899-1900  and  the  following  years, 

the  figures  of  which  are  given  later. 

377 


THE  BUDGET 


Summer 
and 
Spring 
Supple- 
ments 


Average 
Additional 
Appropria- 
tions 


to  the  costs  of  the  Abyssinian  war  and  the  preparations  for 
war  in  Europe,  the  committee  on  public  accounts  brought  up 
the  question  whether  it  would  not  be  useful  to  decide  that  in 
future  the  votes  of  credit  should  have  effect  only  for  the  cur- 
rent year.  This  measure  was  introduced  in  1873- 1874,  when 
the  appropriations  for  the  Ashantee  expedition  were  voted. 

The  supplementary  estimates,  the  only  ones  in  force  in 
normal  times,  apply  to  all  the  civil  and  military  services. 
There  are  summer  supplements  and  spring  supplements,  the 
former  demanded  before  the  end  of  the  ordinary  session,  that 
is,  about  the  month  of  August,  the  latter  corresponding  to  the 
needs  revealed  customarily  about  February  or  March,  by  the 
last  months  of  the  fiscal  year;  both  are  discussed  under  the 
same  conditions  as  the  fiscal  laws,  and  are  voted  by  the  com- 
mittees of  the  entire  House,  then  at  a  general  session.  The 
speakers  for  the  Executive  use  particularly  strong  arguments, 
for  the  reason  that  additional  appropriations  are  less  readily 
granted  than  original  appropriations.^ 

The  average  amount  of  additional  appropriations  can  be 
approximately  estimated  at  19,000,000  for  the  civil  services, 
and  25,000,000  for  the  Army  and  the  Navy,  a  total  of 
40,000,000  francs.  Often,  however,  the  situation  is  more 
satisfactory.  During  the  year  1887- 1888,  for  example,  the 
estimates  of  the  original  budget  were  not  even  reached  and 
the  Army  and  the  Navy  claimed  no  additional  appropriations, 
a  particularly  rare  occurrence.  The  Chancellor  of  the  Ex- 
chequer developed  this  fact  in  his  statement,  with  a  certain 
degree  of  pride. 

"The  Army  and  the  Navy,"  he  said,  "have  not  ex- 
hausted the  funds  put  at  their  disposal  and  Jmve  not  re- 
quired supplementary  appropriations.  It  is  for  the  first 
time  since  1870  that  these  branches  of  the  service  have 
succeeded  in  avoiding  additional  expenditures,  which  up- 

^  The  rules  relating  to  the  form  of  presenting  and  rendering  an 
account  of  the  supplementary  estimates  refer  to  the  following  main 
points : 

Indication  of  chapters  and  sub-chapters  to  which  the  appropriations 
apply;  special  references  to  be  given  in  footnotes;  telegrams  to  be 
transmitted  in  proper  time  with  regard  to  expenditures  made  abroad 
and  exceeding  the  appropriations,  so  that  a  supplement  may  be  imme- 
diately demanded ;  in  case  the  expenditure  is  dependent  on  a  revenue, 
the  supplement  may  be  demanded  only  for  the  balance;  details  and 
sub-divisions  which  the  appropriation  accounts  must  contain  with  re- 
gard to  supplementary  appropriations. 

378 


ADDITIONAL  APPROPRIATIONS 

set  the  ministerial  estimates  and  bring  confusion  into  the 
budgetary  economy."  (Financial  statement  of  Mr. 
Goschen,  March  26,  1888.) 

In  1 888- 1 889  a  supplementary  appropriation  was  made  to 
the  amount  of  10,500,000  francs ;  but  the  expenditures  actually 
disbursed  at  the  end  of  the  budget  period  being  less  by  43,- 
950,000  francs  than  the  Estimates,  this  surplus  covered  and 
more  than  covered  the  supplements  originally  allotted. 
(Statement  of  the  Chancellor  of  the  Exchequer,  April  15, 
1889.)  In  1889-1890,  the  payments  disbursed  on  account  of 
anticipated  expenditures  did  not  exceed  2,000,000  francs. 
(Statement  of  April  17,  1890.)  In  1 890-1 891,  a  demand  for 
supplementary  appropriations  to  the  amount  of  12,123,000 
francs  was  submitted  on  February  20,  1891,  for  the  benefit  of 
the  civil  services;  but  the  net  increase  over  the  original  esti- 
mates did  not  amount  to  more  than  8,900,000  francs,  or  to 
less  than  one-half  of  one  per  cent,  of  the  totals.  (Statement 
of  the  Chancellor  of  the  Exchequer  of  April  23,  1891.) 

In  1892,  Mr.  Goschen  thus  summed  up  the  results  of  the  Mr.  Gos- 
year  1891-1892  :  "24,900,000  francs  of  annulments  of  appro-  statement 
priations  and  16,500,000  francs  of  supplementary  appropria- 
tions :  balance  a  surplus  of  8,400,000  francs" ;  at  the  same  time 
he  commented  on  the  ability  of  the  English  administration  to 
maintain  ^'harmony,  as  far  as  public  expenditures  are  con- 
cerned, between  the  Estimates  and  the  ascertained  facts.  For 
the  last  three  fiscal  periods,  the  discrepancy  has  been  reduced 
to  3,425,000  francs,  against  the  total  sum  of  6,600,000,000 
francs."     (Statement  of  April  11,  1892.) 

Since  1900,  however,  votes  of  credit  relating  to  the  war  in  Effects 
the  Transvaal  have  considerably  changed  the  budgetary  Esti-  war^ 
mates.     From  1900  to  1904,  the  supplements  voted  by  the 
Parliament  of  Great  Britain,  beyond  the  original  appropria-  , 
tions,  ran  as  follows: 

1 899- 1 900  593,000,000  francs 

1 900- 1 90 1  858,000,000       " 

1901-1902  313,000,000       " 

1 902- 1 903  250,000,000       " 

1903-1904  115,000,000       '* 

The  average  of  40,000,000  was  thus  transferred  into  supple- 
ments of  600,000,000  and  800,000,000  during  those  trouble- 
some years.    But  once  the  crisis  had  passed,  perfect  order  was 

379 


THE  BUDGET 


Normal 

Conditions 

Restored 


Reasons 
for 

English 
Accuracy 


reestablished.  For  the  year  1904- 1905,  the  supplementary  ap- 
propriations fell  below  even  the  modest  level  of  former  times. 
Thus,  the  Chancellor  of  the  Exchequer  could  say  in  his  finan- 
cial statement  of  April  10,  1905  :  "Including  several  insignifi- 
cant supplementary  appropriations  voted  in  the  course  of  the 
present  session,  the  disbursed  expenditures  only  reach  the 
amount  of  3,550,000,000,  or  2^,100,000  francs  under  the  Esti- 
mates" In  the  same  v^ay,  in  1906- 1907,  the  definite  surplus 
of  135,000,000  resulted,  not  only  from  surpluses  of  revenues, 
but  also  from  a  75,000,000  decrease  in  anticipated  expendi- 
tures, a  situation  rarely  found  elsewhere.  The  statement  of 
Mr.  Asquith  of  May  7,  1908,  also  announced  a  saving  on  the 
Estimates  of  expenditures  for  1907- 1908,  amounting  to  17,- 
250,000  francs.  According  to  the  statement  of  April  2,  191 2, 
the  total  of  expenditures  disbursed  in  1911-1912  is  still 
68,500,000  francs  less  than  the  voted  expenditures. 

In  July,  19 12,  however,  a  supplementary  appropriation  of 
24,950,000  francs  for  191 2-19 13  for  the  Navy  was  submitted 
and  voted.  This  exceptional  event,  however,  caused  a  great 
outcry  and  heated  discussions. 

The  retrospective  schedules  distributed  in  the  House  of 
Commons  prove  also  that  surpluses  realized  over  expenditures 
are  customary  in  England ;  the  iinal  results  are  nearly  always 
less  than  the  original  Estimates. 

The  causes  of  this  extraordinary  situation  have  already  been 
explained.  First,  the  figures  of  budgetary  Estimates  in  Eng- 
land are  established  on  a  date  very  close  to  the  opening  of  the 
fiscal  period :  in  the  majority  of  cases  even  in  the  course  of  the 
fiscal  period  proper,  which  gives  to  the  Estimates  almost  defi- 
nite precision.  In  the  second  place,  the  Treasury,  that  is,  the 
Minister  of  Finance,  revises  with  a  predominating  authority 
all  the  estimates  of  expenditures  and  thus  gives  them  a  definite- 
ness  which  carries  them  intact  through  the  period,  of  the  execit- 
tion  of  the  budget.  In  the  third  place,  the  parliamentary  initia- 
tive automatically  throttles  every  suggestion  likely  to  disar- 
range the  equilibrium  of  the  budget,  thus  curbing  the  tempta- 
tions to  create  supplementary  expenditures.  In  spite  of  signs 
of  weakness  now  manifesting  themselves,  this  measure  still 
retains  a  wholesome  influence. 

Thus  Parliament,  which  has  been  praised  at  diflFerent  times 
in  the  course  of  the  preceding  chapters,  succeeds  eflfectively  in 
overcoming  in  practice  the  most  formidable  enemy  of  the 
budgets,  viz. :  additional  appropriations. 

380 


CHAPTER  XVIII 
REFUSAL  TO  VOTE  THE  BUDGET 

Consequences  of  Refusal  to  Vote;  Budget  Authorized  for  One  Year 
Only ;  Failure  to  Vote — Revolution ;  Questioned  Under  Restoration ; 
A  Right  of  the  Legislature. 

Attempts  at  Refusing  to  Vote  the  Budget :  Instances  in  England ;  The 
Pitt-Fox  Struggle;  The  Role  of  the  King;  Triumph  of  Pitt;  Har- 
monious Course  of  the  Commons;  German  Experience. 

Attempts  at  Refusing  to  Vote  the  Budget  in  France :  The  Struggle  of 
1877;  The  Executive  Yielded;  Minority  Refusal  to  Vote;  The  Ob- 
servations of  Say. 

We  have  assumed,  hitherto,  that  the  legislature  voted  the. 
budget,  as  is  fortunately  and  customarily  the  case.  It  may- 
happen,  however,  that  the  Chambers  voluntarily  abstain  from 
voting  or  that  they  intentionally  refuse  to  grant  the  Executive 
the  authority  to  collect  taxes  and  to  disburse  expenditures. 

To  refuse  to  vote  the  budget!     One  can  scarcely  conceive  Conse- 
the  consequences  of  such  an  eventuality.     [Under  a  system  quencesof 
such  as  prevails  in  France],  if  the  year  were  to  open  without  toVo^te 
the  budget  having  been  voted,  the  bondholders  could  not  get 
their  interest ;  nor  the  pensioners  their  pensions ;  the  tradesmen 
would  beat  in  vain  at  the  gates  of  the  Treasury;  the  officials 
would  work  without  salaries :  the  schools  would  be  closed :  the 
Army  would  be  deprived  of  its  pay,  of  its  livelihood,  of  its 
equipment,  of  its  provisions.     All  the  functionaries  of  the 
State,  that  is  to  say  practically  everybody,  would  find  himself 
affected ;  the  activities  of  the  country  would  be  paralyzed. 

Taxes,  furthermore,  are  no  longer  collectable  and  the  sud- 
den interruption  of  payments  not  only  immediately  impover- 
ishes the  Treasury,  but  its  effects  are  prolonged  beyond  the 
period;  the  frontiers  are  no  longer  guarded,  the  gates  of  the 
cities  are  abandoned,  bonded  warehouses  are  deprived  of  in- 
spectors, hence  importers,  wholesale  dealers,  truckmen,  inn- 
keepers, etc.,  and  all  the  dealers  in  products  subject  to  customs 
duties  and  taxation,  immediately  flood  the  country  with  to- 
bacco, coffee,  sugar,  liquors,  etc.,  free  of  duty.  The  immense 
administrative  machine,  which  hitherto  had  in  its  grip  every 

381 


THE  BUDGET 


Budget 
Authorized 
for  One 
Year 
Only 


Failure  to 
Vote — 
Revolution 


taxable  thing,  lets  its  prey  escape.  Smuggling,  in  a  short 
space,  can  embarrass  the  public  revenues  for  a  long  period.^ 

Nothing  is  exaggerated  in  this  hypothetical  description;^  it 
is  sufficient  to  read  the  legislative  texts  in  order  to  see  that 
neither  expenditures  nor  revenues  could  exist  without  the  vote 
of  the  budget.  First,  the  expenditures  are  authorized  by  the 
fiscal  law  for  a  single  year.  This  term  of  the  year  having  ex- 
pired, those  who  issue  payment  vouchers  have  no  longer  any 
authority  to  do  so,  nor  can  disbursing  agents  make  further 
disbursements.  So  far  as  the  revenues  are  concerned,  it  would 
be  folly  to  pretend  that  the  original  laws  imposing  taxes  are 
continuous  in  their  operation;  the  authorization  to  collect 
taxes  is  essentially  annual  [in  France],  as  we  have  previously 
explained.  The  fiscal  mechanism  is  set  in  motion  each  year 
only  by  virtue  of  a  new  authorization.  Moreover,  the  final 
article  of  the  fiscal  laws  ^  imposes  penalties  on  tax  collectors 
for  collecting  unauthorized  taxes — penalties,  such  as  none 
would  dare  to  incur. 

If  the  budget  were  not  voted,  it  would  be  just  as  impossible, 
after  January  i,  to  find  tax  collectors  as  it  would  be  to  find 
disbursing  agents.  The  treasuries  would  be  closed  both  to 
incoming  and  to  outgoing  public  funds.  What  was  legal  would 
become  illegal  overnight.  The  suspension  of  the  execution  of 
the  budget  would  constitute  a  revolution.  "Do  you  know,  gen- 
tlemen, what  it  means  to  refuse  the  budget?  Revolution.'* 
(December  lo,  1888.) 

Thus,  at  the  beginning  of  the  Restoration,  when  the  respec- 
tive rights  of  the  legislature  and  of  the  Crown  were  under 
discussion,  the  question  was  brought  up  as  to  whether  the 
Chamber  of  Deputies  really  had  the  extraordinary  and  revolu- 
tionary power  to  refuse  to  vote  the  budget.     Several  speak- 

*  It  was  possible  to  estimate  in  1871  in  the  invaded  departements 
the  prolonged  effects  of  the  suspension  of  the  collections,  although 
the  French  as  well  as  the  German  Administration  made  all  efforts 
to  reestablish  it  rapidly. 

2  The  same  picture  was  presented  to  the  Chamber  of  Deputies 
by  a  former  Minister  of  Finance :  "The  moment  the  budget  is  refused, 
the  debt  is  no  longer  paid;  beginning  with  January  i,  the  public  offi- 
cials no  longer  receive  their  salaries,  the  schools  are  closed,  the  clergy- 
men of  the  various  denominations  do  not  receive  their  salaries,  and 
the  forces  intended  for  national  defense,  the  Army  and  the  Navy, 
would  not  receive  pay  beginning  with  January  i."  (Speech  of  Deputy 
Maurice  Rouvier,  December  10,  1888.) 

3  This  final  article  of  the  annual  budget  law  has  been  commented 
on  and  cited  in  Chapter  XI. 

382 


REFUSAL  TO  VOTE  THE  BUDGET 

ers  contested  it,  maintaining  that  the  representatives  of  the  Questioned 
country,   convened  precisely   for  the  purpose  of  voting  the  Restoration 
budget,  could  not,  without  failing  in  their  duty,  refuse  to  vote 
it.     M.  de  Bonald  exclaimed :     "A  poHtical  assembly  has  no 
more  right  to  refuse  to  vote  the  budget  than  a  man  has  to  take 
his  own  hfe."     (Session  of  March  22,  1816.) 

"It  was  the  overriding  of  the  budget,"  said  another 
deputy,  "which  brought  Charles  I  to  the  scaffold;  it  was 
the  refusing  of  the  budget  which  brought  Louis  XVI  to 
the  same  place ;  it  was  the  disregard  of  the  budget  which 
compelled  Charles  II  to  become  a  hireling  of  Louis  XIV, 
and  thus  prepared  the  revolution  of  1688.  Failure  to  vote 
the  budget  has  always  been  the  sign  of  political  unrest 
and  of  the  greatest  disasters.  The  Chamber  of  Deputies 
has  no  right  to  provoke  such  disorders."  (Speech  of 
Viscount  de  Saint-Chamans,  1817.)^ 

Yes,  unquestionably,  the  refusal  to  vote  the  budget  would  A  Right 
bring  about  all  these  disastrous  consequences.     It  would  be  Legisfa- 
almost  suicidal ;  it  would  lead  to  political  disorganization — the  ture 
prelude  to  great  public  disasters.     The  legislature,  neverthe- 
less, is  armed  with  this  dangerous  weapon.     If  the  right  to 
vote  public  revenues  and  exf)enditure3  rests  with  the  repre- 
sentatives of  the  country,  it  follows  necessarily  that  they  have 
the  right  to  refuse  to  vote  them.    The  right  to  authorize  could 
not  possibly  exist  without  its  logical  counterpart,  the  right  to 
refuse.     The  one  without  the  other  would  lose  value  and 
meaning.^ 

However,  even  if  theoretically  conforming  to  the  spirit  and 
text  of  the  constitutions,^  it  must  be  said  that  in  practice  the 

^  It  has  been  said  more  recently,  in  1877,  in  the  course  of  the  con- 
flict of  which  we  shall  speak  later :  "When  confronted  by  a  Chamber 
which  refuses  to  vote  the  budget,  we  are  returning  to  the  natural 
state." 

2  It  must  be  remembered  that  under  the  Restoration,  that  is,  at  the 
time  when  the  right  of  Parliament  to  refuse  to  vote  the  budget  was 
contested,  the  Parliament's  right  to  vote  public  expenditures  was,  by 
logical  correlation,  contested  as  well.     See  Chapter  II. 

^  "The  Chamber,"  says  an  eminent  commentator  on  the  Constitu- 
tions, "may  be  compelled  under  certain  circumstances  to  intrench 
behind  its  right,  which  the  Constitution  recognizes."  (Speech  of 
Edouard  Laboulaye  in  the  Senate,  on  December  18,  1877,  on  the  sub- 
ject of  the  refusal  to  vote  the  budget.) 

383 


THE  BUDGET 

exercise  of  the  right  to  refuse  the  budget  is  almost  unthinkable. 
Experience  does  not  furnish  a  modern  example — in  the  coun- 
tries having  a  parliamentary  form  of  government — of  a  fiscal 
year  opening  without  a  budget.  Legislative  bodies,  therefore, 
as  history  shows,  use  the  right  of  refusing  to  vote  the  budget 
only  as  a  threat. 


Attempts  at  Refusing  to  Vote  the  Budget  in  England 
AND  IN  Germany 

Instances  The  first  chapter  of  this  book  shows  how  the  Parliament  in 

in  Eng-  England,  under  different  circumstances,  refused  subsidies  to 

^"  the  Stuarts,  who  blundered  in  disregarding  those  acts.^    These 

abuses  of  power  did  not  again  occur.  If,  after  the  events  of 
1688,  the  question  of  refusing  to  vote  the  budget  has  been 
occasionally  raised,  and,  if  conflicts  have  threatened,  a  solu- 
tion has  always  been  found  in  time  to  open  the  fiscal  year  with 
the  necessary  authorizations  for  revenues  and  expenditures. 
The  work  of  Sir  Erskine  May,  The  Constitutional  History  of 
England,  already  quoted,  gives  one  by  one  the  various  in- 
stances and  their  timely  solution. 
Thus,  in  1781,  Thomas  Pitt  ^  suggested  a  delay  of  several 
V  days  before  voting  the  subsidies  in  order  to  wrest  from  Lord 
North  a  promise  relating  to  the  war  with  America.  The  Com- 
mons, however,  stating  that  no  such  suggestion  had  been 
made  since  the  Revolution — rejected  by  a  large  majority  the 
plan  of  a  temporary  refusal  to  vote  the  budget. 
The  Pitt-  In  1784,  the  attitude  of  King  George  III — who  personally 

Fox  defended  against  the  Commons  the  Ministry  of  William  Pitt, 

Struggle  ^j^^  ^^g  ^j^jy  twenty-four  years  of  age — caused  several  at- 
tempts at  refusal  to  vote  the  budget.  The  Opposition,  under 
the  leadership  of  Fox,  who  at  that  time  had  already  begun  his 
struggle  against  Pitt — which  was  to  be  prolonged  until  their 
deaths^ — obtained  from  the  Commons  the  adjournment  of 
the  vote  on  subsidies  on  five  or  six  occasions.    Fox  said : 


1  As  under  the  Stuarts,  the  proper  arTd  permanent  revenues  of  the 
king  could  in  a  pinch  suffice  in  normal  times  to  meet  the  public  ex- 
penditures, the  subsidies  allotted  by  Parliament  represented  only  ex- 
traordinary funds,  the  refusal  of  which  could  not  therefore  bring 
about  the  immense  administrative  disorganization  described  above. 

2  Nephew  of  Lord  Chatham,  known  under  the  name  of  Lord  Camel- 
ford. 

^  Both  Pitt  and  Fox  died  in  the  beginning  of  1806. 

384 


REFUSAL  TO  VOTE  THE  BUDGET 

"It  cannot  be  contested  that  the  Constitution  gives  to 
the  House  the  right  to  refuse  the  funds;  but  this  is  a 
weapon  which  the  House  must  use  with  caution  and  only 
when  the  public  cause  imperatively  demands  such  action. 
I  shall  always  uphold  this  right.  ...  This  is  a  struggle 
between  the  prerogatives  of  the  Crown  and  the  preroga- 
tives of  [representatives  of]  the  people.  The  Chamber 
should  use  all  the  means  within  its  powers  to  defend  these 
privileges ;  this  is  a  duty  which  the  Constitution  imposes 
upon  the  House.  To  withhold  the  demanded  funds  is 
the  most  powerful  of  all  weapons,  and  must,  I  admit,  be 
used  in  the  last  resort.  If  the  ministers  should  persist  in 
their  obstinacy  and  push  things  to  the  extreme,  it  would 
be  perfectly  proper  to  use  this  right  which  makes  the  dis- 
tinction between  a  free  people  and  the  slaves  of  an  abso- 
lute monarchy."  (Session  of  the  House  of  Commons, 
of  February  20,  1784.) 

The  King  was  also  obstinate  in  retaining  a  Cabinet,  enjoy-  The  Role 
ing,  as  he  said,  his  full  confidence  and  which  had  not  as  yet  had  King^ 
time  to  give  proofs  of  its  ability.  The  refusal  of  the  House 
to  vote  the  budget  under  these  conditions  might  have  had  grave 
consequences ;  but  Fox  did  not  retreat,  although,  with  his  cus- 
tomary eloquence,^  he  concealed  the  danger  from  the  eyes  of 
his  colleagues.  Soon,  however,  the  King  succeeded  in  obtain- 
ing the  vote  of  the  la7id  tax,^  which  was  necessary  for  the  pay- 
ment of  the  interest  on  the  debt.  Then,  the  permanent  re- 
sources of  the  Consolidated  Fund  permitted  him  to  carry  on 

^  On  another  occasion  Fox  concealed  his  suggestion  to  refuse  the 
subsidies  under  the  pretext  of  a  simple  demand  for  delays  necessary 
for  consideration :  "I  beg  of  the  Chamber  not  to  see  in  my  suggestion 
any  desire  to  refuse  the  demands  for  money:  I  know  that  the  thing 
is  essential  and  nobody  would  be  more  afraid  than  I  to  oppose  himself 
to  the  general  welfare.  But  who  would  be  to  blame,  in  such  a  case, 
if  not  those  who  dare  to  resist  the  majority  of  the  Chamber  and  to 
hold  its  decisions  in  contempt?  The  amazement  which  possesses  me  Triumph 
does  not  permit  me  to  form  any  idea  and  I  think  that  forty -eight  of  Pitt 
hours  cannot  possibly  jeopardize  the  public  cause,  particularly  when 
such  serious  matters  are  involved."  (February  18,  1784.)  {Collection 
of  speeches  of  Fox  and  Pitt,  12  Volumes,  1819.) 

-  At  that  period  the  land  tax  had  not  been  consolidated  and  fur- 
nished the  budget  about  50,000,000  francs.  Besides,  the  fiscal  period 
then  began  in  January;  the  opening  date  of  the  fiscal  year  was 
changed  to  April  i,  in  the  middle  of  the  nineteenth  century.  See  Chap- 
ter IV. 


THE  BUDGET 

the  government   from  day  to   day   for  three  months,   until 
finally  the  growing  influence  of  Pitt  ^  over  his  colleagues  suc- 
ceeded in  winning  a  majority  of  the  Commons.    After  the  sub- 
sidies had  been  voted,  in  total,  on  March  25,  1784,  the  House 
was  immediately  dissolved  and  new  elections  reorganized  the 
cabinet.^  Taking  it  all  in  all,  no  operation  had  been  suspended. 
Since  then,  the  Commons  have  had  no  need  to  resort  to  ex- 
treme rrteasures,  even  as  a  threat.    "This  weapon  is  rusting  in 
the  arsenal  of  the  constitutional  laws,"  said  Sir  Erskine  May. 
The  historian,  whom  we  are  following,  states  that  during  the 
entire  period  of  the  wars  against  France,  the  Parliament  was 
in  perfect  accord  with  the  Crown:     "The  House  of  Com- 
mons," he  says,  "liberally  granted  the  sums  which  the  Minis- 
ters declared  necessary  for  the  essential  needs  of  the  State. 
Not  a  soldier  was  retired  from  the  ranks  of  the  Army,  not  a 
sailor  was  cut  off  from  the  Navy,  by  vote  of  the  Commons.'* 
With  few  exceptions,  the  annual  budget  plans  were  always 
voted  without  reduction.^     The  fiscal  disputes,  if  any,  were 
concerned  not  with  the  sums  necessary  for  the  needs  of  the 
State,  but  with  the  form  of  the  various  taxes.     This  was  the 
case  with  regard  to  the  abolition  of  the  income  tax  in  18 16, 
and  with  the  rejection  of  the  proposition  to  double  the  tax 
on  real  estate  in  1852.    More  recently,  in  June,  1885,  the  Glad- 
stone cabinet  was  overthrown  on  account  of  a  suggestion  that 
taxes  be  collected  on  beer  and  liquor.*    However,  as  Chapter 
XIV  stated,  it  was  the  House  of  Lords  (and  not  the  Com- 


1  The  majority  of  the  Opposition  against  Pitt  melted  as  to  the  num- 
ber of  votes,  until  March  25,  1784,  as  follows:  January  12,  54  votes; 
February  20,  20  votes;  March  i,  12  votes;  March  5,  9  votes;  March  8, 
I  vote. 

2  "It  was  not  motives  of  prudence,  or  thoughts  of  moderation,  which 
prevented  the  Whig  Party  from  resorting  to  the  terrible  weapon  of 
refusing  subsidies.  It  was  the  impossibility  of  inducing  the  landed 
proprietors — the  cooperation  of  whom  was  indispensable  for  assuring 
a  majority  to  the  opposition — to  follow  this  road."  (Essai  historique 
sur  les  deux  Pitt,  by  Baron  de  Viel  Castel,  two  volumes,  1845.) 

3  Sir  Erskine  May  cites  a  certain  number  of  exceptional  cases  in 
which  the  budgetary  suggestions  of  the  Government  have  undergone 
reductions  which  are  remarkable  for  their  slight  importance:  1857, 
refusal  to  purchase  an  English  chapel  in  Paris;  1858,  abolishing  of 
£308  of  the  salary  of  an  agent  of  the  National  Gallery,  etc. 

*  The  plans  to  increase  indirect  taxes  were  temporarily  replaced  by 
a  deduction  from  the  Sinking  Fund,  in  conformity  with  the  sugges- 
tions of  Sir  Michael  Hick's-Beach,  Chancellor  of  the  Exchequer  and 
successor  in  office  to  Mr.  Childers.     (Statement  of  July  9,  1885.) 


386 


REFUSAL  TO  VOTE  THE  BUDGET 

mons)  which,  in  1909-1910  refused  to  approve  the  budget. 
The  Government  then,  by  various  devices,  succeeded  in  col- 
lecting the  taxes  and  in  paying  the  expenditures  until  the  end 
of  the  crisis. 

In  Germany — even  after  the  events  which  took  place  be-  German 
tween  1862  and  1866  as  related  in  the  second  chapter  of  this     ^P^"^"^*^^ 
book,  when  the  triumphant  Government  yielded  to  the  Cham- 
ber— no  example  of  refusing  to  vote  the  budget  can  be  found. 
Moreover,  the  most  important  item  among  the  expenditures, 
that  for  the  Army,  is  voted  for  a  period  of  several  years.  ^ 

Attempts  at  Refusing  to  Vote  the  Budget  in  France 

Refusal  to  vote  the  budget  would  present  itself  to  our  eyes 
in  the  form  of  a  hypothesis,  deprived  of  all  reality,  at  least  in 
modern  times,  if  it  were  not  for  the  fact  that  recently  grave 
circumstances  have  pretty  nearly  made  such  a  possibility  real. 

As  a  result  of  the  incidents  of  the  famous  May  16  [1877], 
against  which  political  parties  continue  to  inveigh,  the  question 
calmly  studied  in  this  connection  becomes  but  a  subject  of  im- 
passioned comment.     The  statesmen,  whom  the  chief  of  the 
executive  power  obstinately   insisted  on   honoring  with  his 
confidence,^  were  confronted  by  a  hostile  parliamentary  ma- 
jority, but  would  not  abandon  their  position  in  spite  of  this 
fact.     Besides,  December  was  near  and  with  it  the  end  of 
the  year,  with  no  budget  voted  for  the  following  year.     The  The  Strug- 
Chamber  had  intentionally  suspended  the  voting  of  the  budget  g^^  °^ 
for  1878.     The  reports  of  the  commission  on  budget  were   '  ^^ 
ready  and  submitted,  but  the  Assembly  refused  to  put  them 
on  the  order  of  the  day. 

"We  shall  not  abandon,*'  said  the  deputy  reporting  on 
the  matter,  ''what  constitutes  the  last  resort,  the  last  guar- 
antee of  free  nations.  We  will  not  vote  the  four  direct 
taxes,^  except  to  a  real  parliamentary  ministry."  (Re- 
port of  the  commission  on  budget  by  M.  Jules  Ferry,  De- 
cember 4,  1877.) 

1  The  members  of  the  cabinet  in  office  on  May  16  had  already 
retired,  but  their  successors  continued  their  policies. 

-  The  commission  on  budget  refused  even  to  detach  from  the  general 
budget  plans  the  portion  relating  to  direct  taxes,  in  spite  of  the  neces- 
sity of  submitting  their  repartition  to  the  vote  of  the  Conseils  Gene- 
rmx  and  of  the  Conseils  d'Arrondisseincnt,  before  the  end  of  the 
year.     Thus  in  1878  the  rolls  of  direct  taxes  v^ere  issued  very  late. 

387 


THE  BUDGET 

Thus,  the  field  was  thrown  open  for  hypotheses  and  even  for 
[armed]  preparations,  in  view  of  the  imminent  crisis.  The 
public  as  well  as  the  Chambers  figured  with  uneasiness  the 
number  of  days  still  left  of  December,  1877.  The  strangest 
theories  were  expounded.  The  animosity  of  the  opposing  pai  - 
ties  fully  justified  the  anticipation  of  grave  consequences. 

"We  shall  not  deliver  our  gold  nor  our  offices,  the 
products  of  our  devotion,"  exclaimed  Gambetta,  "until 
they  yield  to  the  mandate  which  was  expressed  on  Octo- 
ber 14.  (Date  of  the  last  election.)  We  must  know 
whether  in  France  it  is  the  Nation  that  rules,  or,  whether 
it  is  a  man  who  commands."  (Session  of  the  Deputies, 
December  4,  1877.) 


The 

Executive 

Yielded 


Minority 
Refusal 
to  Vote 


The  Executive — confronted  by  this  opposition — vainly  stud- 
ied and  commented  on  the  fiscal  laws  in  order  to  discover  some 
legal  way  of  passing  over  the  date  of  January  i,  on  its  own 
resources;  but,  realizing  that  no  tax  collector  would  collect 
taxes  and  that  no  disbursing  agent  would  pay  even  a  penny 
out  of  his  treasury,  and  that  the  laws  and  regulations  were 
formal  and  mandatory — it  resolved  fo  yield.  On  December 
15,  1877,  a  new  cabinet  was  appointed  from  the  ranks  of  the 
Majority.  Immediately,  at  a  single  session,  the  Chamber  voted 
the  law  of  direct  taxes,  which  had  been  held  up — as  well  as 
the  douziemes  provisoires,  intended  to  provide  for  the  carrying 
on  of  operations — until  the  fiscal  law  for  1878  was  definitely 
enacted. 

Even  here,  the  refusal  to  vote  the  budget  remained  a  simple 
threat,  representing  only  the  supreme  right  behind  which  the 
Chamber  deemed  it  necessary  to  intrench,  in  order  to  bring  the 
Executive  to  terms. 

This  is  the  last  example  to  be  cited.  Each  year  there  is  a 
certain  group  of  the  Opposition  which  abstains  from  voting 
the  fiscal  law.  But  this  is  no  longer  a  question  of  refusing  to 
vote  the  budget.  "We  do  not  systematically  refuse  to  vote 
the  budget;  but  we  are  not  going  to  vote  any  budget  which 
we  consider  wrong"  (Chamber  of  Deputies,  July  5,  1889)  ; 
this  is  the  formula  of  the  Minority.  When  some  ten  years 
'  ago  several  members  of  the  Chamber  succeeded  one  another 
on  the  floor  before  the  final  vote  was  passed,  to  explain  the 
reasons  for  their  refusal  to  vote  the  budget,  one  of  the  as- 
sistants  exclaimed :      "Then   nobody   is   going   to   vote   the 

388 


REFUSAL  TO  VOTE  THE  BUDGET 

budget,"  which  caused  laughter  in  the  assembly,  for  every- 
body was  perfectly  aware  of  the  fact  that  in  spite  of  a  few 
protests,  the  fiscal  law  was  not  in  jeopardy. 

Jean-Baptiste  Say  wrote,  with  his  customary  vigor : 

"Perfectly  independent  legislators,  imbued  with  the  The  Obser- 
f eeling  of  the  sanctity  of  their  duties,  should  not  be  afraid  say  °"^  °* 
to  refuse  to  vote  the  budgets  if  the  latter  fail  to  give 
them  the  desired  guarantees  against  abuses.  Nothing  is 
less  surprising  than  the  fact  that  individuals  in  power  are 
of  different  opinion  and  that  they  fear  such  procedure 
likely  to  overturn  the  State  .  .  .  but  that  individuals, 
who  take  no  part  in  the  plunder,  should  consider  this  use- 
ful firmness  a  dangerous  extremity,  is  a  sign  of  weakness 
which  protects  extravagance  and  corruption  and  is  an 
accomplice  to  the  downfall  of  governments!"  (Cours 
d'economie  politique,  8th  part.) 

The  eminent  economist  then  states  that,  if,  in  the  times  of 
Louis  XIV,  a  body  of  representatives  had  been  able  by  means 
of  refusing  to  vote  the  budget  to  present  an  obstacle  to  the 
wars  and  to  the  persecutions,  France  would  not  have  fallen 
"into  the  degradation  and  misery  which  marred  the  end  of  that 
theatrical  reign  and  the  King  himself  would  not  have  been 
overwhelmed  with  humiliations."  But  how  could  Louis  XIV 
l)e  asked  to  submit  his  resolutions  and  his  budgets  to  the  votes 
of  a  delil>erative  assembly?  He  would  no  longer  have  been 
king.  Still,  Jean-Baptiste  Say  is  sound  in  urging  that  the  legis- 
lative chambers  insist  upon  their  rights,  even  if  they  be  pushed 
to  the  extreme.  The  safest  way,  however,  because  the  appli- 
cation of  this  right  is  so  potential  of  danger,  is  [for  the  Execu- 
tive] to  proceed  in  such  manner  as  to  keep  the  chambers  from 
availing  themselves  of  a  right  which  is  theirs  to  exercise. 


389 


I 


PART  III 
EXECUTION  OF  THE   BUDGET 


CHAPTER  XIX 
THE  COLLECTION  OF  REVENUES 

The  Collection  of  Revenues  Authorized  by  the  Fiscal  Law:  Direct 
Taxes :  The  Returns  from  Direct  Taxes ;  Dual  Nature  of  the  Mech- 
anism. 

The  Preparation  of  the  Rolls:  The  Hierarchy;  The  Comptrollers; 
The  Nature  of  the  Rolls;  The  Tax  Registers;  Commission  or  Board 
of  Equalization;  .Duties  of  the  Comptroller;  Complaints  of  Tax- 
payers ;  The  Status  of  the  Comptroller ;  The  Departmental  Inspec- 
tors; The  Directors'  Functions  and  Salaries. 

Collection  of  Direct  Taxes:  Jurisdiction  of  the  Collectors;  Notice  of 
Taxes  Due ;  Notices  to  Individuals ;  Office  Hours  of  the  Collectors ; 
Manner  of  Dealing  with  Delinquent  Taxpayers;  Forms  of  Notices; 
Mode  of  Exacting  Penalties;  Taxes  Are  Promptly  Paid;  The  Audit- 
ing of  the  Rolls;  Collectors  Released;  Collectors  Pay  in  Certain 
Arrears;  Close  of  the  Fiscal  Period;  Heavy  Responsibility  of  the 
Collectors. 

From  the  befogged  atmosphere  of  the  legislative  bodies 
where  the  fiscal  law  is  devised,  we  enter  the  calmer  sphere  of 
the  Executive.  The  legislative  chambers  have  discussed, 
amended  and  revised  the  governmental  plan ;  in  their  delibera- 
tions they  have  freely  considered  all  phases  of  the  problem; 
attempts  have  l^een  made  to  follow  the  road  of  progress  and 
it  is  not  impossible  that  some  progress  has  been  made.  Out 
of  the  noisy  conflict  of  opinions  finally  emerges  the  law  which 
is  to  be  applied.  The  executive  power,  charged  with  apply- 
ing this  law,  has  only  to  travel  a  well-traced  road :  the  work 
of  the  executive  power  involves  only  a  quiet  routine.  The 
mechanism  of  the  execution  of  the  budget  is  limited  to  the 
collecting  of  money  from  the  taxpayers,  and  to  getting  this 
money  to  the  Central  Treasury,  only  to  scatter  it  again  in  a 
bountiful  shower  to  the  holders  of  vouchers  (orders  for  pay- 

391 


THE  BUDGET 

merit),  in  conformity  with  perfected  and  very  precise  rules, 
which  we  shall  examine  under  the  following  heads : 

1.  The  collection  of  revenues  authorized  by  the  fiscal 

law  [Chapters  XIX,  XX,  XXI]. 

2.  The    concentration   of    revenues   in    the    Treasury 

[Chapters  XXII,  XXIII]. 

3.  The  making  of  disbursements  in  conformity  with 

appropriations  [Chapters  XXIV,  XXV,  XXVI]. 

The  Collection  of  Revenues  Authorized  by  the  Fiscal 

'--       Law 

A  review  of  the  mechanism  for  tax  collecting  ^  consists  in 
showing  the  daily  duties  of  each  agent  in  the  service;  in  show- 
ing what  procedure  he  follows  in  collecting  funds  from  the 
taxpayers;  in  showing  upon  what  authority  he  depends,  to 
what  control  he  submits ;  in  giving  special  attention  to  officials 
at  the  bottom  of  the  service  ladder,  who  are  in  closest  contact 
with  the  public. 

Direct  taxes  will  be  first  described.  Then  follows  a  descrip- 
tion of  indirect  taxes. 

Direct  Taxes 

The  division  of  direct  taxes  includes  real  estate,  taxes  on 
improved  and  unimproved  property,  the  tax  on  doors  and  win- 
dows, the  personal  and  the  personal  property  tax,  license  taxes, 
taxes  on  mines,  mortmain  (entailed  property),  billiards,  clubs, 
horses  and  carriages,  etc.  These  taxes  yielded  to  the  Treas- 
ury 6i6,ooo,(XX)  francs,^  to  this  it  is  necessary  to  add  about 
577,000,000  collected  correlative^  as  centimes  additionnels, 
for  the  benefit  of  the  departements  and  municipalities.  In  a 
word,  in  that  year  more  than  1,000,000,000  francs  were  col- 
lected and  sent  to  the  Treasury.  The  amount  involved  makes 
it  worth  while  to  have  a  scientific  and  stable  system  to  control 
its  collection. 

The  characteristic  feature  of  the  system  is  its  duality,  that 

1  The  study  of  the  nature  of  the  various  taxes  fills  a  one  year's 
course  in  the  Ecole  des  sciences  politiques  and  would  fill  one  or  more 
printed  volumes.  We  assume,  therefore,  that  the  subject  is  well 
known  and  proceed  at  once  to  study  the  mechanism  of  the  collection 
of  these  taxes. 

2  Budget  of  1913. 

A.   /_-       392 


THE  COLLECTION  OF  REVENUES 

is,  the  action  of  two  distinct  administrative  divisions  is  in-  Dual 
volved;  one  has  charge  of  determining  the  amounts  of  taxes  ^/^^^^ 
to  be  imposed  [assessment] ;  the  other  of  making  the  collec-  Mechanism 
tion. 

Many  persons  of  good  judgment  consider  it  a  great  advan- 
tage to  have  a  dual  system  for  assessing  and  collecting  taxes. 
As  a  matter  of  fact,  responsibility  becomes  more  effective  by 
being  better  specialized.  The  organization,  how^ever,  is  very 
expensive.  The  budget  must  provide  for  paying  a  double  set 
of  officials,  though  possibly  this  is  warranted  by  the  results 
of  better  management;  but  even  when  all  the  elements  are 
considered,  the  charges  against  the  budget  appear  excessive. 
Thus,  the  tendency  toward  economy  has  brought  suggestions 
of  a  reform,^  the  purpose  being  to  fuse  into  a  single  service 
the  preparing  and  the  collecting  of  the  rolls  of  direct  taxes. 
As  we  have  no  need  to  examine,  in  this  connection,  into  these 
suggestions,  the  idea  of  which  by  the  way  is  quite  old,  we 
shall  limit  ourselves  to  showing  the  actual  functions  of  the 
two  branches  of  administration  as  they  exist. 

[The  Preparation  of  the  Rolls] 

The  administration  of  direct  taxes  *'is  charged  with  making  The 
out  the  rolls  of  the  four  forms  of  direct  taxes  and  of  the  taxes  Hierarchy 

^  See  the  report  of  M.  Marcel  Barthe  on  the  subject  of  the  sugges- 
tion of  combining  the  services  of  assessment  and  of  collection  of 
direct  ta^^es.  (Suggestion  submitted  on  July  3,  1873,  and  repeated 
finally  on  December  18,  1880.)  "The  combining  of  the  two  services 
of  the  assessment  and  of  the  collection,"  he  said,  "by  simplifying  the 
administration  and  by  reducing  the  number  of  agents,  would  bring 
about  an  important  reduction  of  expenditures." 

The  reduction  of  expenditures  is  estimated  at  8  or  9,000,000.  This 
considerable  figure  shows  at  first  glance  that  a  more  important  re- 
form, bearing  on  the  treasurers  general  was  intended  in  this  plan. 
Without  entering  prematurely  into  the  discussion  of  the  merits  of  the 
institution  of  treasurers  general  we  may  recommend  the  report  of 
M.  Marcel  Barthe  as  very  instructive.  Consult  at  the  same  time  the 
report  of  M.  de  la  Monneraye,  in  the  name  of  the  commission  on 
administrative  services,  with  regard  to  the  organization  of  the  min- 
istry of  finance.     (National  Assembly,  February  23,  1872.) 

A  plan  of  fusion  of  the  services  of  assessment  and  collection  of 
direct  taxes  was  also  included  in  the  suggestion  of  Deputy  dAillieres 
and  other  deputies,  relating  to  the  abolition  of  the  office  of  Treasurer 
General;  this  suggestion  was  submitted  on  January  23,  1888,  and  was 
discussed  in  the  Chamber  of  Deputies  on  the  23rd  and  26th  of  March, 
1889,  and  incidentally  on  July  2,  1889. 

393 


trollers 


THE  BUDGET 

assimilees/'  Organized  under  the  laws  of  November  24,  1799, 
at  the  beginning  of  the  Consulat,^  it  is  composed  of  86  di- 
rectors, 106  inspectors,  1,000  comptrollers  of  various  grades, 
100  supernumeraries,  a  total  of  about  1,300  revenue  agents^ 
making  up  the  departmental  hierarchy. 

From  this  large  group  the  comptrollers  stand  out  promi- 
nently; they  are  the  pivot  of  the  entire  service;  they  are  in 
direct  contact  with  the  public  and  have  charge  of  carrying  out 
the  details  of  the  work,  which  the  others  supervise  complete 
TheComp.  and  direct.  The  comptrollers — distributed  all  over  the  coun- 
try, two  or  three  per  district  {arrondissement) — reside  in  the 
capital  town  of  the  district,  whence  they  go  out  for  at  least 
nine  months  of  each  year,  making  tours  through  the  forty, 
fifty  or  sixty  parishes  which  compose  their  district.^  These 
comptrollers — by  their  uniforms,  by  their  associations,  by  the 
examinations  and  diplomas  required  for  their  appointment — • 
constitute  a  picked  body  of  officials. 

"The  function  of  the  comptrollers  of  direct  taxes  con- 
sists of  keeping  up  to  date,  in  cooperation  with  the  local 
tax  assessors,  the  original  registers  {matrices)  from 
which  the  rolls  are  made  up.  In  order  to  do  this,  they 
must  ascertain  the  changes  which  have  occurred  in  the 
conditions  of  the  taxpayers  and  in  conditions  affecting 
tax  assessments.  They  must  verify  the  taxable  licenses 
and  investigate  complaints." 

The  terms — origincU  registers  (matrices)  local  tax  assessors 
(repartiteurs  locaux),  transfers  (mutations),  complaints  and 
rolls — need  to  be  defined.  When  they  are  explained,  the  func- 
tions of  the  comptrollers  present  no  mysteries. 

The  rolls  are  "lists  made  up  for  each  parish,  containing 

^  See  the  details  of  the  phases  which  preceded  and  caused  this  or- 
ganization, in  the  first  volume  of  our  Histoire  des  finances  de  Vancien 
regime  et  de  la  Revolution  and  in  another  book,  Les  Finances  du  Con- 
sulate 1902. 

2  The  expenditures  for  salaries  reach  4,348,000  francs.  Increases 
in  the  number  of  the  personnel  are  demanded  every  year,  particularly 
in  the  class  of  inspectors  and  comptrollers. 

^  On  the  average  each  district  of  control  would  include  from  thirty- 
nine  to  forty  parishes.  This  average,  however,  does  not  correspond 
with  the  actual  situation,  because  of  the  fact  that  large  cities  engage 
several  comptrollers  each.  Some  of  the  comptrollers  in  small  localities 
have  as  many  as  seventy  parishes  in  their  districts. 

394 


THE  COLLECTION  OF  REVENUES 

every  kind  of  tax,  with  the  names  of  the  taxpayers  and  the 
amount  which  each  taxpayer  will  have  to  pay."  ^  Since  the 
making  out  of  the  rolls  is  the  final  object  of  the  work  here 
described,  it  is  given  first  place,  in  order  to  show  clearly  the 
end  to  be  achieved.  The  original  registers  (matrices)  are 
"registers  containing  bases  of  assessment  of  every  taxpayer." 
The  assessment  rolls  are  prepared  from  these  original  regis- 
ters.^ The  original  registers  determine  the  elements  of  in- 
dividual assessments,  and,  on  the  basis  of  these  elements  mul- 
tiplied by  the  rates  or  the  centimes  to  be  paid  per  franc,  the 
sum  which  every  taxpayer  has  to  pay  is  entered  on  the  assess- 
ment rolls. 

The  elements  of  taxation,  however,  contained  in  the  original 
registers  must  be  corrected  each  year,  because  either  the  names 
of  the  taxpayers  have  changed  on  account  of  death,  sale,  dona- 
tion, etc.,  or  because  the  condition  of  the  taxables  has  changed 
— that  is,  increased  or  diminished  as  the  result  of  enlarge- 
ments, constructions,  demolitions,  absorption  by  the  public 
domain,  new  use,  etc.  Hence,  transfers  may  be  defined  as 
follows:  ^Transfers  are  annual  operations,  consisting  of 
recording  in  the  original  registers  all  changes  in  the  name  or 
in  the  elements  affecting  the  assessment  of  each  taxpayer." 

The  local  tax  assessors,  with  whom  the  comptrollers  act 
jointly,  are: 

"The  members  of  the  municipality  and  certain  local 
taxpayers  appointed  by  the  sub-prefect  to  constitute  a 
commission,  charged  with  cooperating  in  the  work  of  indi- 
vidual assessments."  ^ 


The   Na- 
ture   of 
the  Rolls 


The  Tax 
Registers 


Commis- 
sion or 
Board  of 
Equaliza- 
tion 


The  complaints  are  "petitions  of  taxpayers  for  obtaining  a 
change  of  the  bases  or  of  the  amount  of  their  assessments, 

1  The  roll  is  defined  as  follows :  "The  roll  is  the  warrant  by  means 
of  which  the  collectors  proceed  with  the  levying  of  direct  taxes." 

The  Dictionnaire  des  finances  says :  "The  roll  is  a  memorandum  on 
which  is  entered  the  name,  the  business  and  the  residence  of  the 
tax-payers,  together  with  the  indication  of  the  bases  of  the  assess- 
ment and  the  amounts  they  have  to  pay." 

2  The  original  registers  form,  as  far  as  the  elements  of  assessments 
are  concerned,  the  rough  draft  of  the  rolls. 

3  In  Paris,  by  virtue  of  the  laws  of  the  Twenty-third  Frimaire,  of 
the  year  VII  of  the  Republic,  a  commission  on  direct  taxes,  composed 
of  officials  appointed  by  the  administrative  authority,  takes  the  place 
of  the  assessors.  This  commission  works  in  conformity  with  a  deci- 
sion of  June  I,  1849. 

395 


THE  BUDGET 

either  as  a  matter  of  law  or  as  a  matter  of  charity";  these 
petitions  are  demands  for  relief  (decharge)  from  the  tax, 
or  for  reduction  (reduction) ,  and  constitute  litigious  questions 
submitted  to  the  decision  of  the  Conseil  de  Prefecture;  or  they 
may  take  the  form  of  requests  for  a  remission  {remise)  or 
diminution  {moderation) y  appealing  to  the  sense  of  justice 
of  the  prefect  in  case,  for  example,  of  calamities,  hail-storms, 
frosts,  floods,  etc. 
Duties  Let  us  follow,  now,  a  comptroller  of  direct  taxes  while  in 

cf  ***^t  II  *^^  ^^^^ '  ^^^  functions  will  thus  be  made  clearer  than  by  at- 
tempt at  definition.  For  nine  or  ten  months  of  the  year  each 
comptroller  tours  his  district  and  the  most  important  of  these 
tours,  the  so-called  "tour  of  transfers"  {tournee  des  muta- 
tions) takes  place  from  May  to  August.  Another  tour,  called 
the  'license  tax  tour"  {tournee  des  patentes)  takes  place  from 
September  to  October.  Finally,  the  last,  called  the  "totcr  of 
corresponding  taxes"  {tournee  des  taxes  assimilees)  in  Febru- 
ary and  in  March,  has  been  added  only  recently. 

Before  leaving  his  place  of  residence,  however,  the  comp- 
troller begins  by  getting  numerous  data  from  the  various  bu- 
reaus, particularly  from  the  registrar's  office  {enregistrement) 
where  he  finds  important  information  relating  to  sales,  in- 
heritances, deeds  of  division,  leases,  etc.  He  gets  other  infor- 
mation from  the  bureaus  of  the  custom  house,  indirect  taxes, 
of  the  toll  office,  the  municipal  revenue  office  and  railroad 
stations,  particularly  concerning  the  license  taxes.  Besides,  in 
the  course  of  the  transfer  tour,  the  tax  collector  submits  to 
the  comptroller  his  memorandum  book  in  which  he  has  set 
down  all  the  local  information  which  has  come  to  him  in  the 
course  of  the  year. 

Equipped  with  this  advance  information,  the  comptroller 
tours  his  thirty-five  or  forty  parishes,  accompanied  in  turn  by 
the  tax  assessors,  who  give  him  their  opinions,  impressions 
and  estimates.  He  thus  determines,  by  seeing  and  hearing 
{de  visu  et  auditu)  the  changes  to  be  entered  in  the  original 
register.  These  registers,  after  having  served  for  four  years, 
are  renewed,  because  more  than  2,000,000  new  entries  are 
made  in  them  each  year. 

The  tour  on  which  is  collected  the  data  on  license  taxes 
{tournee  des  patentes)  is  chiefly  concerned  with  the  making 
of  a  new  census  of  taxable  things,  renting  values,  number  of 
workmen,  implements,  capacity  of  the  various  storehouses, 
receptacles,  the  amounts  of  things  produced,  etc.,  according  to 

396 


THE  COLLECTION  OF  REVENUES 

the  different  and  countless  specifications  peculiar  to  each  line 
of  trade  or  industry.  Because  of  the  fluctuations  in  conditions 
affecting  the  tax,  the  license  tax  tour  is  deferred  until  the  end 
of  the  year,  so  that  the  original  registers  and  the  rolls  may 
show  the  very  latest  situations.  At  the  same  time,  the  work 
relating  to  'transfers,  made  on  the  previous  tour,  is  corrected, 
if  necessary,  completed  and  brought  to  date. 

The  tour  devoted  to  the  taxes  assimilees  has  been  detached 
from  the  general  tour  devoted  to  transfers,  in  order  to  relieve 
the  latter  of  an  excess  of  work  with  which  it  was  burdened. 

The  comptrollers  investigate  the  complaints  made  by  tax-  Complaints 
payers,  either  in  the  course  of  regular  tours  or  on  special  payers" 
visits.  The  service  of  investigating  complaints,  added  to  the 
preceding  services,  involves  an  enormous  amount  of  work, 
because  500,000  individual  complaints  are  submitted  annually, 
not  to  mention  the  declarations  made  in  the  town-halls  pur- 
suant to  the  law  of  July  21,  1887,  and  the  collective  demands 
made  on  account  of  losses  and  extraordinary  events. 

Special  inquiries  ordered  by  superior  authority  compel  the 
comptrollers  to  be  present  in  the  localities  in  which  the  investi- 
gation is  to  be  made. 

During  these  different  tours  and  local  visits,  as  well  as  on 
days  when  they  stay  in  their  places  of  residence,  the  comp- 
trollers hold  themselves  at  the  disposal  of  the  taxpayers,  listen 
to  the  explanations  given  by  them  and,  while  drawing  out  the 
facts,  themselves  furnish  information  needed  by  the  taxpayer 
with  a  view  to  making  the  tax  assessment  more  perfect 
through  details  thus  coming  to  their  knowledge. 

The  importance  and  the  amount  of  work  which  devolves  The  Status 
on  the  comptrollers  of  direct  taxes  can  thus  readily  be  seen,  ^  ^^^    .. 
and  yet  until  1902  the  comptrollers  of  direct  taxes  continued     °"™p  ^° 
to  be  classified,  as  far  as  their  pensions  were  concerned,  among 
the  local  agents  (agents  sedentaires) .    Article  42  of  the  law  of 
March  30,  1902,  finally  corrected  this  inexplicable  error  of  the 
laws  of  June  3,  1853,  classifying  the  comptrollers  of  direct 
taxes  among  the  active  branches  of  the  service  on  grounds 
ascertained  in  the  course  of  statements  of  supporting  argu- 
ments and  of  reports  which  justly  set  forth  their  merits. 

The  work  of  the  comptroller  ends  with  bringing  the  original 
registers  up-to-date ;  these  form  the  basis  from  which  the  di- 
rectors make  out  the  assessment  rolls. 

Finally,  in  the  superior  hierarchy,  the  inspectors  averaging  The  De- 
nearly  one  for  each  departement,  verify  all  the  details  of  the  jngp'^ctors' 

397 


THE  BUDGET 


The  Direc- 
tors' Func- 
tions and 
Salaries 


service  of  the  comptrollers,  either  by  review  of  the  rolls  trans- 
mitted periodically,  or  later  by  inspection  tests,  thus  determin- 
ing the  accuracy  with  which  the  comptrollers  have  performed 
their  functions — ascertaining  the  degree  of  zeal,  and  reporting 
on  the  subject  to  the  director.  Finally,  they  attend  personally 
to  all  matters  of  particular  importance,  the  investigation  of 
which  the  director  has  entrusted  to  them.  The  inspector  is 
the  chief  reliance  of  the  director. 

The  directors,  residing  in  the  capital,  make  tours  through 
the  departements,  direct  and  centralize  the  entire  business, 
transmit  the  orders  coming  from  the  central  administration 
and  their  own  orders  to  the  inspectors  and  to  the  comptrollers, 
whose  tours,  verifications  and  changes  they  regulate.  They 
decide,  within  the  limits  of  their  jurisdiction,  the  questions 
raised  by  the  various  incidents  of  the  service,  and,  besides,  have 
personal  charge  of  making  out  the  rolls  and  of  having  them 
copied,  either  en  regie,  that  is,  in  consideration  of  reimburse- 
ment of  expenses,  as  far  as  the  rolls  made  for  the  State  are 
concerned,  or  in  consideration  of  compensation  generally 
higher  than  their  expenses  for  the  rolls  prepared  for  the  de- 
partements  and  communes.  Thus,  when  looking  over  the 
budget,  one  may  be  astonished  to  see  that  the  salaries  of  the 
directors  of  direct  taxes  run  only  from  7  to  10,000  francs, 
while  the  salaries  of  their  colleagues  in  the  registrar's  office,  in 
the  custom  house  and  in  the  office  of  indirect  taxes,  range  from 
8  to  12,000  francs.  It  must  be  borne  in  mind,  however,  that 
they  receive  proportionate  remittances  allowed  them  by  the 
departements  and  communes  for  the  making  out  and  copying 
of  the  rolls;  these  remittances  supplement  the  salaries  paid  by 
the  State. 

As  soon  as  the  rolls  are  made  out  and  copied,  the  assessment 
is  complete. 


Collection  of  Direct  Taxes  " 

Then  another  administration  steps  in,  charged  with  levying 
[collecting]  the  amounts  entered  in  the  rolls.  The  director  of 
direct  taxes  begins  by  submitting  the  rolls  to  the  prefect  of  the 
departement,  in  order  that  the  latter  may  issue  a  warrant  for 
their  collection.  Subsequently,  he  sends  them  to  the  Treasurer 
General,  together  with  a  schedide  of  the  amount  of  the  rolls 
arranged  by  parishes  (etat  par  commune  du  montant  des 
roles), 

398 


THE  COLLECTION  OF  REVENUES 

The  Treasurer  General — as  far  as  these  executory  rolls  and 
the  schedule  accompanying  them  are  concerned — enters  the 
amounts  in  his  accounts  and  becomes  responsible  for  them. 
Then,  subdividing  the  amounts  among  the  special  collectors 
under  his  orders,  he  makes  these  accountable  officers  in  turn 
responsible  for  the  portion  assigned  to  each  of  them.  Finally, 
the  collectors  are  charged  with  the  amount  of  the  rolls,  which 
the  special  collector  turns  over  to  them  for  the  parishes  of 
their  district. 

Thus,  going  from  hand  to  hand,  these  documents  involve 
successively  the  responsibility  of  those  who  receive  them,  as 
would  be  the  case  with  bills  sent  in  for  collection.^ 

The  collector  to  whom  we  finally  come  constitutes  the  last 
rung  in  the  service  ladder  of  directly  accountable  officers 
placed  under  the  immediate  jurisdiction  of  central  authorities 
charged  with  the  duty  of  exercising  accounting  and  financial 
control.  In  each  departement,  the  special  collectors  and  the 
treasurer  general  are  superior  to  the  collectors.  ^ 

In  1804,  the  present  organization  of  collectors  was  estab- 
lished to  take  over  the  functions  of  the  ancient  collectors  and 
tax  farmers  whose  functions  have  been  described  in  other 
books.^  The  law  of  February  25,  1804,  brought  about  a  con- 
siderable reform  by  the  following  simple  words :  "All  col- 
lectors of  direct  taxes  shall  be  appointed  by  the  First  Consul 
(Article  9.)"  The  collectors  who  had  been  but  simple  con- 
tractors for  the  collection  of  taxes  thereupon  became  real  offi- 
cers, to  whom  the  collection  of  direct  taxes  was  entrusted 
when  the  work  of  the  comptrollers  was  completed. 

The  collectors — numbering  about  five  thousand,^  that  is, 

^  This  analogy  of  the  rolls  with  bills  to  be  collected  has  often 
been  emphasized.  Lately  an  editor  of  a  daily  has  pushed  the  com- 
parison so  far  as  to  suggest  the  abolition  of  collectors  and  the  re- 
placing of  them  by  rural  letter  carriers.  These,  he  said,  already  had 
charge  of  collecting  commercial  funds  and  they  could  in  the  same  way 
present  to  the  taxpayers  the  due  coupons  for  their  taxes :  "The  rural 
letter  carrier,  who  passes  the  door  of  each  taxpayer  and  goes  to  and 
fro  over  the  fields  where  he  meets  the  inhabitants  of  the  village,  all 
of  whom  he  knows  personally,  should  have  charge  of  the  collection 
of  taxes."  The  imagination  of  the  editor  of  the  Petit  Journal  antici- 
pates perhaps  the  simplifications  which  the  twenty-first  century  may 
realize. 

2  Our  books,  Finances  de  Vancien  regime  et  de  la  Revolution  and 
Finances  du  Consulat,  show  the  details  of  the  system  which  was  in 
force  before  1804. 

^  The  law  of  January  30,  1907,  stipulated :    "The  number  of  collec- 

399 


THE  BUDGET 


Jurisdic- 
tion of 
the  Col- 
lectors 


Notice  of 
Taxes  Due 


Notices  to 
Individ- 
uals 


on  the  average  two  for  each  canton  [the  canton  is  a  sub- 
division of  the  arrondissement,  and  is  in  turn  subdivided  into 
parishes] — officiate  in  seven  or  eight  parishes  on  the  average, 
sometimes  ten  or  twelve  or  more,  depending  on  the  importance 
of  the  locality.  There  are,  therefore,  more  collectors  than 
comptrollers ;  the  collecting  of  taxes  requires  a  personnel  five 
or  six  times  as  great  as  the  assessing  of  taxes.  Each  one  col- 
lects on  an  average  180,000  francs  of  direct  taxes;  his  salary 
[over  and  above  the  minimum  set  out  in  the  budget]  is  based 
on  [the  number  of  tax  notices  which  he  sends  out].^ 

How  then  do  the  collectors,  in  whose  hands  the  rolls  are 
placed,  proceed  with  levying  [collecting]  the  revenues? 

The  first  formality,  of  a  secondary  and  routine  nature,  is 
that  of  combining  under  the  head  of  each  taxpayer  the  total 
of  all  taxes  assessed  against  him  on  the  various  rolls,  in  order 
to  facilitate  the  bookkeeping  of  which  we  shall  speak  later. 
The  official  operation,  which  in  fact  is  the  beginning  of  the 
levying  [collecting]  of  the  revenues,  is  the  publication  of  the 
rolls.  This  act  carried  out  on  the  initiative  of  the  collector — 
by  the  mayor  of  each  parish  through  the  posting  of  placards 
printed  on  unstamped  paper  ^ — is  intended  to  inform  each  tax- 
payer of  the  existence  of  documents  which  show  his  indebted- 
ness for  the  coming  year.  This  publication,  furthermore, 
serves  as  a  point  of  departure  for  a  period  of  three  months, 
during  which  complaints  and  reclamations  may  be  made.^ 

An  individual  tax  bill  follows.  The  collectors  receive,  with 
the  rolls,  a  package  of  sheets  of  notices  to  individuals  to  pay 
taxes,  which  are  prepared  by  the  administration ;  they  contain 
a  copy  of  the  law,  together  with  an  indication  of  the  bases 
for  his  assessment,  of  the  amount  of  taxes  he  has  to  pay  in 
total  and  monthly,  and  of  the  sums  due  the  State  and  the  local 

tors  shall  be  reduced  to  4,900  on  account  of  the  abolition  of  the  col- 
lections in  the  cities."  The  collections  in  the  cities  shall  be  managed 
by  the  special  fiscal  agent. 

1  The  tendency  is  to  substitute  for  the  proportionate  remittances 
the  more  satisfactory  system  of  "fixed  salary*;  the  commission  on 
the  budget  for  1888,  however,  pronounced  in  favor  of  maintaining 
the  remittances  paid  to  the  collector.  (See  the  report  of  M.  Fernand 
Faure,  which  is  still  very  true,  and  was  submitted  on  November  17, 
1877.) 

2  See  text  of  the  law  of  July  20,  1901. 

^  With  the  exception  of  cases  of  false  and  double  entries  the  law 
of  December  29,  1884,  makes  the  period  of  three  months  begin  only 
with  the  date  on  which  the  taxpayer  has  notice  of  official  action 
being  taken  against  him.     (Article  4.) 

400 


THE  COLLECTION  OF  REVENUES 

subdivisions^  [departements  and  communes].  The  collector 
adds  the  date  of  the  publication  of  the  rolls  and  announces  the 
days  and  the  hours  his  office  will  be  open,  and  the  dates  of  his 
tours;  these  notices  are  sent  to  the  residence  of  each  taxpayer.^ 

After  these  preliminaries,  the  taxpayers  having  been  noti-  office 
fied,  first  collectively  and  then  individually,  the  collection  be-  ^r°"u* 
gins.     On  the  days  and  at  the  hours  specified  in  the  notices,   collec- 
the  collector  can  be  found  either  in  his  office  or  in  the  parishes  tors 
en  tour,  as  the  case  may  be.     When  a  payment  is  made  he 
issues  a  receipt  taken  out  of  his  stub  register  and  enters  the 
sum  on  the  margin  of  the  rolls  in  a  space  reserved  for  that 
purpose.^     From  this  procedure  it  may  be  deduced  that  the 
direct  taxes  are  qiierahle  and  portable.    They  are  querahle  be- 
cause the  collector  himself  goes  out  in  the  communes,  other 
than  his  own,  to  collect  the  taxes;  they  are  portable  because 
the  taxpayer  himself  brings  in  his  contribution.     These,  how- 
ever, are  entirely  too  ambitious  expressions  for  such  small 
things. 

Manner  of  Dealing  ivith  Delinquent  Taxpayers:  Not 
all  taxpayers,  however,  are  on  time  to  meet  the  collector; 
and  not  all  of  them  bring  their  exact  quota.  It,  therefore,  be- 
comes necessary  to  compel  the  tardy  taxpayer  to  pay  his  taxes 
by  a  procedure  the  successive  steps  of  which  are  as  follows : 

Notice  without  penalty  (sommation  gratis),  a  first  summons  Forms  of 
for  the  payment  of  taxes,  indicating  to  the  taxpayer  his  ar- 
rears. 

Notice  with  cost  *  (sommation  avec  frais),  a  summons  sim- 
ilar to  the  above,  but  involving  a  fine. 
■  — ^ 

^  According  to  the  law  of  July  13,  191 1,  the  notice  to  pay  taxes  con- 
tains three  columns  indicating  the  share  of  the  State,  the  share  of  the 
dcpartement  and  the  share  of  the  commune. 

2  For  each  notice  to  pay  taxes  there  is  a  fee  of  5  centimes  for  the 
cost  of  making  out  the  summons  and  mailing  it.  The  director  receives 
3  centimes  and  the  collector  2. 

3  The  law  of  the  third  of  Frimaire,  of  the  year  VII  of  the  Re- 
public, provided  for  the  immediate  emargination  of  the  rolls  at  the 
moment  of  payment.  The  law  of  March  29,  1897,  because  of  the 
difficulty  and  the  delay  which  this  operation  presented  in  cases  of 
great  hurry  and  when  a  large  crowd  of  people  had  to  be  handled, 
provided:  "Articles  141  and  142  of  the  law  of  the  third  of  Frimaire 
of  year  VII  of  the  Republic,  relating  to  the  emargination  of  the  rolls 
in  plain  letters  by  the  collectors,  are  herewith  abrogated." 

*  Since  the  law  of  February  9,  1877,  the  summons  involving  costs 
replaces  the  old  barbarous  terms  of  garnison  collective  and  garnison 
individuelle,  which  until  then  perpetuated  the  memory  of  the  bailiff 

401 


Notices 


THE  BUDGET 


Mode  of 
Exacting 
Penalties 


Taxes  are 

Promptly 

Paid 


Order  to  pay  (commandement) ^  a  judicial  action,  inaugu- 
rating the  actual  procedure  in  conformity  with  the  code  of  pro- 
cedure. 

Attachment  (saisie),  executed  within  three  days  from  the 
issuance  of  the  order  to  pay,  in  case  the  taxpayer  fails  to  dis- 
charge his  obligations. 

Finally,  the  sale  (vente)  of  furniture,  chattels  and  products 
according  to  the  nature  of  the  taxes. ^ 

No  prosecution,  which  involves  costs,  can  be  started  save 
by  virtue  of  a  warrant  (contrainte) .  "The  warrant  is  an  or- 
der of  prosecution  against  a  delinquent  taxpayer,  enumerated 
in  a  collective  list  (with  regard  to  notices  with  costs)  and 
enumerated  individually  (in  connection  with  orders  to  pay  and 
the  following  actions)."  The  warrant  is  issued  by  a  special 
collector  and  is  endorsed  by  the  sub-prefect.  The  law  abstains 
from  giving  the  collector  the  power  to  begin  a  prosecution  at 
his  discretion. 

The  servers  of  warrants  (porteurs  de  contraintes)  are  spe- 
cial executive  agents,  who  perform  the  functions  of  bailiffs 
in  matters  relating  to  direct  taxes.  Since  the  laws  of  April  13, 
1898,  and  of  February  25,  1901,  which  permit  the  mailing  of 
notices  of  prosecution,  the  number  of  the  warrant-servers  has 
been  reduced  from  year  to  year. 

Whether,  because  of  the  actual  operation  of  these  processes 
or  through  their  threatened  operation,  or  by  reason  of  the 
good  will  of  taxpayers,  almost  the  total  amount  of  direct 
taxes  is  paid  into  the  Treasury  of  the  collector  on  the  fixed 
dates.  At  the  end  of  the  year  the  rolls  are  regularly  balanced, 
except  for  about  one-third  of  a  twelfth,^  while  the  costs  of 


men  actually  quartered  in  the  houses  of  the  taxpayers,  as  was  the 
case  under  the  old  regime. 

1  By  virtue  of  the  law  of  November  12,  1808,  the  collectors  have  in 
the  name  of  the  Public  Treasury  a  certain  lien  on  the  crops,  fruits, 
rents  and  revenues  of  properties  subject  to  taxation,  for  the  real 
estate  tax  of  the  year  just  elapsed  and  for  the  current  year,  as  well 
as  a  lien  on  the  furniture  and  chattels  of  the  debtors,  regardless  of 
locality,  with  regard  to  the  direct  taxes  for  the  year  which  has 
elapsed  and  for  the  current  year.  With  regard  to  immovable  prop- 
erties, the  collectors  are  creditors  in  the  sense  of  the  civil  law. 

2  The  situation  on  February  i,  1912,  with  regard  to  the  collection 
of  direct  taxes  for  the  fiscal  period  was  as  follows: 

Total  of  the  rolls  issued  1,175,849,100  francs 

Amount  collected  1,153,919,400      " 

Not  collected  21,929,700 

This  means  only  0.22  of  1/12  in  arrears  at  the  end  of  twelve  months. 

402 


THE  COLLECTION  OF  REVENUES 

prosecutions  amount  at  the  most  to  two  francs  per  thou- 
sand.^ 

The  Auditing  of  the  Rolls:  It  still  remains  to  show  how 
the  complete  auditing  of  the  rolls  is  done:  as  has  been  said, 
these  rolls  must  be  audited  in  total  on  certain  regulation  dates. 
It  must  first  be  ascertained  that  the  rolls  are  correctly  made 
out  and  that  they  can  therefore  be  collected.  For  this  purpose 
the  collectors  look  over  the  rolls  for  errors,  false  entries,  repe- 
titions, omissions  or  material  exaggerations,  inexact  figures, 
etc.,  which  may  have  distorted  either  the  individual  entries  or 
the  totals.  As  the  result  of  this  preliminary  work,  the  col- 
lectors prepare  a  schedule  of  unduly  imposed  taxes  (etat  des 
cotes  indument  imposees),  which  schedule  is  submitted  to 
the  council  of  the  prefecture  and  passed  upon  in  line  with  the 
opinion  rendered  by  the  comptroller  and  the  director  of  direct 
taxes.  In  case  of  a  favorable  decision,  a  release  is  granted 
and  the  prefect  issues  an  order  reducing  the  amount  of  the 
rolls  by  the  amount  designated. 

During  the  first  two  months  of  the  second  year  of  the  fiscal  Collectors 
period,  that  is,  twelve  months  after  the  collection  has  begun,  ^^^^^sed 
the  tax  collectors  submit,  if  necessary,  to  the  council  of  the 
prefecture,  a  new  kind  of  petition  in  the  form  of  a  schedule 
of  uncollect  able  taxes  (etat  des  cotes  irrecouvrables) ,  which 
covers  all  taxes  which  the  taxpayers  are  obviously  unable  to 
pay  on  account  of  poverty,  insolvency,  departure,  death,  etc. 
The  accountable  officer  [the  collector]  attaches,  as  an  exhibit 
substantiating  his  request,  the  various  documents  required  for 
proving  his  endeavors  [to  collect],  etc.,  and  showing  the  reality 
of  absences,  cases  of  death,  or  the  total  absence  of  assets 
which  he  claims.  The  council  of  the  prefecture,  in  case  the 
request  of  the  collector  appears  to  be- justified,  by  its  decision 
causes  an  order  of  release  to  be  issued  by  the  prefect  for 
uncollectable  taxes. 

As  soon  as  these  orders  are  issued  and  the  rolls  are  cor- 
rected accordingly,  the  collector  pays  out  of  his  own  funds 
all  uncollected  amounts,  if  any. 

^  The  cost  of  prosecution  fluctuated  in  former  times  around  the 
figure  one  per  i,ooo.  In  1886  these  costs  for  the  first  time  reached 
the  rate  of  two  per  1,000.  In  1889  they  amounted  to  2.03  per  1,000 
and  in  1890  to  2.04  per  1,000.  In  1889  this  cost  was  reduced  to  1.86 
per  1,000.  In  1904  it  rose  again  to  two  per  1,000.  In  1907  it  amounted 
only  to  1.74  per  1,000;  in  191 1  it  amounted  to  1.60  per  1,000. 

403 


THE  BUDGET 


Collectors 
Pay  in 
Certain 
Arrears 


Close 
of  the 
Fiscal 
Period 


Heavy 
Responsi- 
bility 
of  the 
Collectors 


At  the  expiration  of  the  third  year  after  the  beginning  of 
the  fiscal  period,  the  collectors  deposit  to  their  own  account  ^ 
funds  to  cover  that  portion  of  the  rolls  which  has  not  been 
audited.^  From  December  30  of  the  second  year  of  the  fiscal 
period  on,  the  special  collectors  (receveurs  particuliers) — 
anticipating  for  their  respective  districts  payments  of  the  col- 
lectors {receveurs) — make  up  from  their  own  funds  the  ar- 
rears to  their  treasuries.  The  collectors,  thirteen  months  later, 
cover  this  advance  made  by  the  special  collectors. 

Thus,  twenty-three  months  after  the  opening  of  the  fiscal 
peHod,  the  Treasury  receives  the  total  of  the  [corrected]  rolls 
from  the  hands  of  the  special  fiscal  agents,^  and  three  years 
after  the  same  date  from  the  hands  of  the  collectors  *  [the 
Treasurer  receives  the  total  proceeds  of  the  rolls  in  his  vaults] 
— a  practice  which  is  most  advantageous  for  the  security  of 
the  Treasury. 

It  must  be  borne  in  mind,  however,  that  in  case  of  a  de- 
crease of  public  prosperity  or  in  case  of  a  deterioration  of  the 
present  regular  habits  of  the  people  and  particularly  in  case 
some  great  crisis  should  cause  the  collections  to  fall  ofT,  the 
collectors  could  by  no  means  guarantee  with  their  own  funds 
the  Treasury  against  loss.  They  would  at  least  demand  ample 
indemnities  for  taking  such  risks  as  was  the  case  in  the  be- 
ginning of  the  century.     Thus,  precisely,  at  the  moment  when 


^  The  collector  issues  to  himself  a  stub  receipt. 

2  At  this  time  a  list  is  prepared  enumerating  by  name  all  the  bal- 
ances to  be  collected.  By  virtue  of  this  list  the  collector,  although 
he  becomes  the  personal  creditor  of  the  delinquent  taxpayers,  reserves 
against  them  and  for  his  benefit  the  powers  which  the  Treasury  pos- 
sesses. 

^  From  the  amount  of  the  rolls  have  been  deducted,  as  it  was  said, 
the  portions  which  were  unduly  imposed  and  the  portions  which  are 
uncollectable  and  for  which  the  prefects  have  issued  ordinances  of 
release  as  a  result  of  decisions  passed  by  the  councils  of  the  pre- 
fecture. 

*  In  case  of  a  deficit  or  of  the  absconding  of  the  collector,  the 
Treasury  can  attach  their  bonds.  Moreover,  the  special  collectors  are 
responsible  for  the  funds  of  their  subordinates.  In  the  same  way 
the  General  Treasurers  are  responsible  for  the  business  management 
of  the  special  collectors.  Moreover,  the  law  of  September  30,  1807, 
imposes  a  legal  mortgage  on  all  the  properties  of  accountable  officers, 
giving  to  the  Treasury  at  the  same  time  the  claim  to  all  the  movable 
or  immovable  property  acquired  after  the  appointment.  This  law 
cannot  be  applied  to  the  collectors.  (Decision  of  the  ministry  of 
March  21,  1807.) 


404 


THE  COLLECTION  OF  REVENUES 

the  guarantee  of  the  agents  would  be  particularly  useful  and 
efficacious,  it  would  come  to  naught. 

Recapitulating,  we  may  say  that  the  words  duality,  responsi- 
bility and  contract  symbolize  the  present  system  of  direct  tax- 
collection. 


405 


CHAPTER  XX 
THE  COLLECTION  OF  REVENUES— Continued 

The  Collection  of  Indirect  Taxes:  The  Division  Administering  In- 
direct Taxes;  Things  Taxed  Indirectly;  Personnel  of  the  Admin- 
istration; Fees  of  the  Droits  an  Comptant;  The  Droits  Constates 
Compel  Payments. 

The  Droits  au  Comptant:  The  Fees  of  the  Receveurs  Biiralistes; 
Sixteen  Thousand  Receveurs  Biiralistes ;  They  Collect  180,000,000 
Francs;  The  Octroi;  The  Monopolies  of  the  State;  Tobacco  and 
Powder;  How  They  Reach  the  Public;  Proposed  Reforms  as  to 
Licenses;  How  Matches  Are  Sold;  Simple  Mechanism  for  Col- 
lecting. 

Droits  Constates:  How  the  Droits  Constates  Are  Collected;  The 
Comptrollers  Direct  and  Verify;  They  Notify  Taxpayers;  Local 
Collectors  Receive  Payments;  Field  Collectors;  Their  Duties;  The 
Superior  Administration  Examines;  Register  of  Orders;  The  In- 
spector; The  Tobacco  Retailers;  Shipments  of  Liquor;  The  Rou- 
tine of  the  Collector;  They  Verify  Supplies,  etc.;  Liquor  Houses; 
The  Field  Collector ;  The  Details  Are  Endless ;  The  Field  Collector 
Looks  After  Traffic;  He  Collects  Taxes  from  the  Individual;  The 
Funds  Collected. 

Inspectors  and  Directors:  The  Departmental  Inspector;  He  Inspects 
All  Offices;  Inspectors  Have  Large  Duties. 

Recapitulation:  The  Reports  of  the  Inspector;  The  Directors  Prose- 
cute. 

The  Collection  of  Indirect  Taxes 

The  administrative  divisions  in  charge  of  the  assessing  and 
collecting  of  indirect  taxes,  named  in  the  order  of  their  finan- 
cial importance,  are :  indirect  taxes,  registry  and  stamps,  cus- 
toms. In  addition,  there  is  an  administrative  division  of  the 
state  industries  attached  to  the  ministry  of  finance,  which  pro- 
duces tobacco  and  matches,  and  a  division  administering  the 
powder  industry  which  is  attached  to  the  ministry  of  war  and 
which  manufactures  gunpowder  and  explosives.^ 

The  Division  Administering  Indirect  Taxes:  The  division 
administering   indirect   taxes   levies  annually   nearly    1,400,- 

^  Posts  and  telegraphs  cannot  be  classified   nowadays  among  the 
fiscal  industries. 

406. 


THE  COLLECTION  OF  REVENUES 

000,000,  of  which  826,000,000  are  taxes  and  about  573,000,000 
are  the  proceeds  from  the  sale  of  products  of  monopoHes.^ 
Twenty  to  twenty-five  different  matters  go  through  the  hands 
of  this  division,  as  is  shown  by  the  following  definition : 

*'The  division  administering  indirect  taxes  has  charge  Things 


Taxed 
Indirectly 


of  collecting  internal  revenues  from  various  objects,  mer- 
chandise and  works,  such  as :  liquor,  sugar,  salts,  candles, 
oils,  vinegars,  gold  and  silverware,  playing  cards,  trans- 
portation on  land  and  water,  licenses,  etc.,  and  on  the 
selling  and  supervision  of  certain  products  of  monopolies, 
such  as :  tobaccos,  powder,  matches." 


The  collection,  sale  and  supervision  of  these  various  prod-  Personnel 
ucts,  as  may  readily  be  seen,  require  a  considerable  personnel,  ^dminis- 
which,  according  to  the  tables  of  recent  budgets,  is  composed  tration 
as  follows:  Eighty-five  directors ;' about  100  deputy  directors 
and  700  senior  clerks;  about  190  inspectors;  nearly  400  comp- 
trollers, who  direct  an  entire  army  of  clerks  and  of^cers ;  2,400  ' 
field  collectors;  more  than  2,600  senior  clerks,  etc.,  or  8,000 
agents  and  sub-agents  who  compose  what  is  called  the  general 
serznce.  Other  agents  are  in  charge  of  .the  special  assay  service 
{service  de  la  garantie) ;  still  others,  very  numerous  agents 
and  sul>agents,  are  in  special  charge  of  the  sugar  factories 
and  alcohol  distilleries;  they  bring  the  above  list  to  nearly 
11,000.  To  these  must  also  be  added  the  principal  collectors 
{receveurs  principaiix),  the  bonded  storekeepers  (entre- 
poseurs),  the  local  special  fiscal  agents  (receveurs  particuliers 
sedentaires) ,  and  the  15,000  or  16,000  revenue  collectors  {re- 
ceveurs huralistes).  This  makes  an  approximate  total  of 
25,000  agents,  sub-agents  and  collectors  to  be  classified,  ac- 
cording to  the  nature  of  their  functions.  In  this  connection, 
for  the  purpose  of  making  this  classification,  a  distinction  must 
be  made  between  droits  au  comptant  and  droits  constates.^ 

^  Collections  of  indirect  taxes  show  in  the  budget  for   1913  the 
following  main   elements: 

Liquors  477,000,000  francs 

Salts,  candles,  transportations,  licenses,  sugar,  etc.      349,000,000      " 
Tobacco,  powder  and  matches  573,000,000       " 


Total  1,399,000,000  francs 

-  The  droits  constates  and  the  droits  au  comptant  form  for  the  in- 
direct taxes  permanent  divisions  of  schedules  of  proceeds,  of  definite 
accounts  of  receipts,  of  the  general  financial  account,  etc. 

407 


THE  BUDGET 


Fees 
of  the 
Droits  Au 
Comptant 


The  Droits 
Constates 
Compel 
Payments 


The  [kind  of  indirect  taxes  called]  droits  au  comptant,  as 
the  name  indicates,  are  paid  immediately  by  the  taxpayers : 
'They  are  payable  and  are  actually  paid  the  moment  the  tax- 
payers make  their  declarations  as  prescribed  by  the  law,"  says 
circular  note  No.  445  of  February  5,  1857.^  This  can  be 
expressed  still  better  by  saying :  'The  droits  au  comptant  are 
those  [taxes  or  fees]  paid  at  the  time  when  the  person  paying 
them  is  attending  to  a  formality  or  on  requesting  a  service  to 
be  rendered  to  them,  or  again  when  making  a  purchase  [as  of 
tobacco  or  matches]."  In  this  connection  the  taxpayers  come 
around  themselves — not  all  by  themselves,  however,  because 
after  all  they  would  certainly  prefer  not  to  come  at  all — to  ask 
for  and  to  pay  forthwith  for  a  formality  or  for  a  service 
rendered  to  them. 

This  is  not  the  case  with  the  droits  constates.  The  afore- 
said circular  note  No.  445.  defines  these  droits  constates  as 
follows:  "The  droits  constates  are  those  [indirect  taxes] 
which  result  either  from  facts  developed  during  the  fiscal 
period  with  regard  to  the  taxpayers  or  from  agreements  signed 
by  them  and  which  must  be  collected  subsequently  on  the  action 
taken  and  on  the  responsibility  of  the  collectors."  *  The  words 
collected  subsequently  indicate  that  in  this  connection  the  oper- 
ations of  assessment  and  of  collection  are  no  longer  coincident. 

In  the  first  case  [droits  an  comptant^,  the  initiative  rests 
with  the  taxpayer:  the  fiscal  agent  apparently  plays  only  a 
passive  part.  In  the  second  case  [droits  constates^  it  is  the 
taxpayer  who  passively  submits  to  the  inquiries  of  the  officers, 
and  who  delays  paying  his  debts  until  he  is  summoned,  in  due 
form  of  law ;  the  initiative  is  then  incumbent  upon  the  officers. 
It  can  be  seen  that  these  two  kinds  of  collection  involve  a  dis- 
tinct hierarchy. 

The  Droits  Au  Comptant 

The  droits  au  comptant  are  composed  of  taxes  on  traffic 
in  wines  and  ciders — a  large  part  of  them  resulting  from  the 
consumption  of  alcohol — of  tolls  at  city  gates,  where  they 
exist,  of  certain  other  portions  of  various  taxes  laid  on  the 

^  The  circular  note,  by  speaking  only  of  the  declarations,  is  incom- 
plete unless  it  means  by  the  latter  the  formalities,  operations  or  pur- 
chases which  are  the  result  of  the  declarations. 

2  The  preliminary  notes  of  definite  accounts  of  revenues  also  give 
definitions  of  the  droits  au  comptant  and  of  the  droits  constates  which 
are  worth  consulting. 

408 


THE  COLLECTION  OF  REVENUES 

price  of  tobacco,  powder,  matches,  etc.  The  total  represents 
the  sum  of  750,000,000  to  800,000,000  francs,  that  is,  more 
than  half  the  proceeds  of  indirect  taxes. 

Among  the  agents  in  charge  of  collecting  the  indirect  taxes  The  Fees 
we  find,  in  the  first  place,  the  receveiirs  buralistes,  who  are   „  *"^ 
''commissioned  agents  charged  with  delivering  notices  and  with  Buralistes 
receiving  declarations."  The  delivering  of  notices  (delizrance 
des  expeditions) ,  together  with  the  collecting  of  the  dues  which 
this  involves,  occurs  when  the  taxpayer  asks  for  a  permit,  a 
pass,  a  receipt,  etc.,  which  is  intended  to.  accompany  a  ship- 
ment of  liquor  or  other  taxable  matter.      The  receiznng  of 
declarations  (reception  des  declarations)  is  imposed  upon  tax- 
payers who  enter  or  quit  a  business,  work  or  lie  idle,  change 
their  implements  or  their  system  of  operations,  etc. 

In  order  to  put  these  formalities  within  easy  reach  of  the 
taxpayer,  the  law  of  April  28,  18 16,  stipulated:  "The  ad- 
ministration of  indirect  taxes  shall  establish  an  office  in  each  Sixteen 
parish  in  charge  of  a  solvent  citizen  able  to  perform  these  ^^^^^^^^^s 
functions"  (Article  233).  The  number  of  such  holders  of  Buralistes 
coltect^fships  is  at  present  about  16,000.  These  are  not  of- 
ficers, properly  speaking,  particularly  in  small  localities,  where 
tradespeople,  grocers,  hardware  dealers,  haberdashers  or  toy 
dealers,  keep  registers  [of  taxes]  in  some  corner  of  their 
stores,  while  the  merchandise  takes  up  the  remaining  space 
and  where  the  taxpayer  himself  becomes  a  client;  this  brings 
customers  to  the  establishment.  A  tobacco  license,  which  is 
generally  held  by  such  a  store,  supplements  the  amount  of 
the  remittances.^  Even  if  the  incumbent  of  such  office  is  not 
an  officer  in  the  true  sense  of  the  word,  he  at  least  stands  in 
his  village  as  a  personage  of  certain  importance,  who  is  sur- 
rounded with  the  trappings  of  governmental  power,  so  alluring 
in  France. 

Thus,  at  small  expense,^  the  State  is  able  to  scatter  over  They 
its  territory  a  number  of  offices  corresponding  to  the  needs  of   jg*^o(Sootx) 
the  service,  the  [meshes  of  the]  net  becoming  so  much  the  Francs' 

^  The  holders  of  collectorships  are  paid  by  means  of  remittances 
which  are  proportionate  to  the  number  of  invoices  they  deliver,  ac- 
cording to  a  decreasing  rate.  The  annual  proceeds  of  these  remit- 
tances, particularly  in  the  villages,  at  times  reaches  the  ridiculous 
sum  of  twenty  or  thirty  francs.  Then,  a  retail  tobacco  shop  attached 
to  the  collectorship  increases  the  proceeds,  as  has  been  said  above. 

2  The  amount  of  remittances  to  the  holders  of  collectorships  exceeds 
annually  5,000,000  francs. 

409 


THE  BUDGET 


The 
Octroi 


closer  as  the  totals  of  taxable  wealth  increase.  Thus,  the 
sum  of  about  180,000,000  ^  is  collected  all  told  in  cash  by  the 
holders  of  collectorships. 

In  the  second  place,  the  collectors  of  excise  tolls  ^  collect  in 
cash  ^  the  dues  on  importations  at  the  gates  of  cities  *  where 
the  total  population  reaches  the  figure  of  4,000.  This  yields 
about  35,000,000  francs  annually,  without  including  the  tolls 
collected  for  the  benefit  of  the  municipalities.  Other  dues  of 
a  secondary  nature  are  also  collected  in  cash,  for  example,  the 
dues  on  assays,  certain  parts  of  dues  on  vinegar,  on  playing- 
cards,  on  candles,  etc. 


Tobacco 

and 

Powder 


How  They 
Reach  the 
Public 


The  Monopolies  of  the  State:  Finally,  the  gross  proceeds 
of  the  fiscal  monopolies,  amounting  to  573,000,000  francs,  end 
the  list.  A  special  administration,  subordinated  to  the  Minister 
of  Finance,  has  charge  of  the  manufacturing  of  tobacco.  This 
administrative  division  is  known  by  the  generic  name  of  State 
Industries  {manufactures  de  VEtat)  because  for  a  long  while 
it  has  manufactured  powder  as  well  as  tobacco,  and  has  finally 
been  put  in  charge  of  the  manufacture  of  matches.  Since 
^^7Zy  powder  and  explosives  have  been  manufactured  by  the 
ministry  of  war,  together  with  material  of  the  same  nature 
needed  for  the  service  of  the  Army.  As  far  as  matches  are 
concerned,  the  monopoly  of  matches,  until  1890,  was  entrusted 
to  a  special  corporation,  which  held  a  license  for  manufacture 
and  sale  by  virtue  of  successive  contracts.'  They  are  now 
manufactured  and  sold  directly  by  the  State  in  conformity 
with  the  provisions  of  the  law  of  December  2y,  1889. 

Tobacco  and  powder,  regardless  of  who  manufactures  them, 
are  sold  by  the  administration  of  indirect  taxes,  which  em- 
ploys for  the  sale  of  these  articles  two  classes  of  agents,  who 

^  These  180,000,000  are  composed  of  the  proceeds  of  the  taxes  from 
the  traffic  in  wines  and  ciders,  of  the  portion  of  the  excise  tax  on 
alcohol,  paid  at  the  time  the  alcohol  is  going  out  or  coming  in,  of  the 
tax  of  forty  centimes  per  shipment  for  the  custom-house  permit,  of 
the  stamp  tax  of  ten  centimes  on  all  the  fiscal  receipts,  of  the  licenses 
of  public  vehicles  on  land  and  of  a  certain  number  of  other  collections. 

2  In  the  excise  administration  are  special  collectors  for  excise  tolls 
except  where,  by  agreement  with  the  municipality  in  question,  these 
excise  tolls  are  collected  by  excise  collectors. 

^  Cash  and  forthwith,  except  in  cases  of  storing  the  goods  in  a 
bonded  warehouse. 

*  At  the  gates  of  cities,  except  in  open  localities  where  there  is  only 
a  central  bureau. 

•"'  From  January  i,  1875,  to  January  i,  1890. 

410 


THE  COLLECTION  OF  REVENUES 


make  collections  in  cash.     These  agents  are  the  bonded  store- 
keepers and  the  retailers. 

The  bonded  storekeepers,  stationed  in  the  capital  cities  of 
the  arrondissenients^  receive  the  products  of  the  State  Indus- 
tries ^  and  store  them  for  sale  to  the  retailers  of  their  district, 
proportion  to  the  demands   for  them.     Tobacco   is  paid 


m 


for  in  cash  by  the  retailers  to  the  bonded  storekeepers,  at  a 
price  list  which  is  lower  than  the  prices  charged  to  the  public. 
The  difference  between  the  two  price  lists  constitutes  the  mar- 
gin to  the  retailers — that  is,  their  profit.  Thus,  for  the  most 
popular  kind  of  tobacco,  called  scaferlatis  ordinaires,  or  com- 
monly cap  oral,  the  bonded  storekeepers  charge  the  retailer 
11.50  francs  for  one  kilogram,  who,  in  turn,  sells  it  to  the 
public  at  12.50  francs  per  kilogram,  in  conformity  with  the 
price  Hst  printed  on  the  lal^els.  The  profit  of  the  retailers 
therefore  amounts  to  one  franc  per  kilogram  or  8.69. per  cent. 
It  is  around  this  rate  that  the  profit  on  the  other  kinds  of 
tobacco  fluctuates. 

The  result  is  that  from  497,000,000  francs'  worth  of  tobacco  Proposed 
sold  in  19 10,  the  48,000  retailers  divided  among  them  about 
43,000,000  in  profits,  or  on  the  average  of  8.75  per  cent. 

If  the  tobacco  retail  licenses,  instead  of  being  given  away 
more  or  less  arbitrarily,  were  awarded  to  the  highest  bidder 
— a  procedure  which  has  been  suggested  at  different  times  in 
the  legislature  and  which  could  easily  l>e  established  for  to- 
bacco retail  shops  of  the  first  class  yielding  a  gross  profit  of 


Reforms 
as  to 
Licenses 


1  Only  about  ten  arrondisscments  in  France  do  not  have  bonded 
storehouses  for  tobacco.  Almost  all  the  bonded  storekeepers  are  at 
the  same  time  chief  or  special  collectors. 

There  are  still  several  special  bonded  storekeepers  whose  tenure  is 
precarious,  because  the  Chamber  has  obtained  from  the  Minister  of 
Finance  the  latter's  promise  to  abolish  these  offices  as  they  become 
vacant. 

2  The  bales  of  tobacco  which  the  bonded  storekeepers  receive  from 
the  manufacturers  are  counted,  some  by  weight  and  some  by  the 
number  of  packages.  As  far  as  the  latter  are  concerned,  the  control 
is  easy.  The  bales,  however,  which  are  (Counted  by  weight,  particu- 
larly the  bales  of  tobacco  in  powder  form  which  is  used  for  snuffing, 
the  density  of  which  is  constantly  changed  by  the  higher  or  lower 
degree  of  humidity,  and  the  weight  of  which  is,  in  consequence 
thereof,  different  from  the  weight  originally  entered  on  the  records 
by  the  shipping  factory,  cause  daily  discussions  with  regard  to  the 
fixing  of  the  responsibility.  At  times  the  natural  humidity  is  in- 
creased by  an  artificial  one  which  is  intended  to  conceal  the  waste 
which  results  from  a  more  or  less  legitimate  cause. 


411 


THE  BUDGET 


How 
Matches 
Are  Sold 


Simple 
Mechanism 
for  Col- 
lecting 


more  than  1,000  francs  each — the  treasuries  would  derive  a 
considerable  profit  from  this  item.  But,  in  spite  of  the  changes 
which  have  occurred  in  the  political  regime,  the  reform  for- 
merly urged  by  the  Opposition  does  not  seem,  nowadays,  to 
have  any  chance  of  success. 

As  far  as  powder  and  explosives  are  concerned,  the  sale  of 
which  is  of  much  less  importance  than  the  retailing  of  tobacco 
(it  yields  about  22,000,000  of  gross  proceeds),  the  same 
bonded  storekeepers,  whom  we  have  described  above,  receive 
from  the  powder  mills  of  the  ministry  of  war  barrels  and  cases 
of  powder,  which  they  subsequently  sell  to  the  retailers  for 
cash. 

Matches — according  to  the  new  organization  which  came 
into  operation  after  the  monopoly  was  restored  to  the  State 
in  1890 — are  delivered  directly  to  the  wholesalers  by  the  fac- 
tory. There  are  no  bonded  stores  for  matches.  The  collectors 
of  indirect  taxes  register  the  orders  for  matches  filed  with 
them  by  the  wholesalers.^  Each  order  must  be  accompanied 
by  a  bonded  tender  or  a  deposit  of  the  price.  The  collectors, 
after  having  endorsed  these  orders,  forward  them  to  the  fac- 
tory of  the  district.^  As  soon  as  advice  of  shipment  is  re- 
turned, they  collect  the  amount  of  the  price.  The  division 
of  indirect  taxes,  as  far  as  matches  are  concerned,  limits  itself 
to  receiving  orders  for  shipments,  to  collecting  the  invoices 
and  to  supervising  the  wholesalers  and  retailers,  and  finally 
to  preventing  smuggling  from  abroad. 

The  droits  an  comptant — although  they  constitute  the  first 
important  category  of  taxes  in  the  hands  of  the  administra- 
tive division  of  indirect  taxes — 'have  a  simple  mechanism. 
Receivers,  collectors  of  excise  and  bonded  storekeepers  pa- 
tiently wait  in  their  offices  for  the  arrival  of  taxpayers,  and 
they  limit  themselves  to  delivering  for  the  money  paid  either 
the  blank  forms  or  the  goods  required  by  the  taxpayers.  Noth- 
ing could  be  simpler ;  it  is  almost  tantamount  to  voluntary  con- 
tributions deposited  in  a  charity  box,  if  behind  the  stationary 
agents  there  did  not  appear  legions  of  field  officers,  equipped 
with  the  power  of  imposing  all  manner  of  penalties,  pushing 
the  taxpayers  towards  the  counters  over  which  the  fiscal  ad- 


*The  word  wholesale  means  only  that  every  order  shall  be  com- 
posed of  complete  boxes,  weighing  a  minimum  of  500  kilograms. 
Every  licensed  merchant  can  be  a  wholesale  dealer. 

2  France  is  divided  into  four  or  five  districts  for  State  Industries. 


412 


THE  COLLECTION  OF  REVENUES 

ministration  sells  its  blanks,  its  services  and  its  monopolized 
merchandise. 

Droits  Constates 

The  new  class  of  agents  employed  in  collecting  the  droits 
constates  follows  the  taxpayers  over  their  own  ground,  looks 
into  their  houses,  searches  for  taxable  property  in  their  cel- 
lars, their  stores,  their  shops ;  pursues  them  over  the  highways, 
stops  them  at  the  gates  of  cities — in  a  v/ord,  follows  them 
everywhere  there  is  need  of  securing  and  collecting  a  tax. 
These  agents  of  the  field  service  are  called  field  or  traveling 
collectors;  in  the  centers  of  districts,  comptrollers  or  station 
chiefs  (controletirs  or  chefs  de  poste).  Let  us  study  their 
functions  in  detail. 

How  the  Droits  Constates  Are  Collected:  The  service  in 
the  centers  of  districts,  large  cities,  small  cities  or  large  vil- 
lages, because  of  the  great  importance  attached  to  it,  has  en- 
tirely too  complicated  functions  to  form  the  subject  of  our 
study.     However,  we  must  mention,  first,  its  dual  character. 

At  the  head  of  this  service,  in  the  larger  centers,  is  the  TheComp- 
comptroller,  who  supervises  several  sections  of  clerks  who  have  p^rect^and 
charge  of  controls,  excises  and  verifications  of  the  general  ser-  Verify 
vice.     In  smaller  localities,  the  local  chief  {chef  de  poste)  y 
who,  as  a  rule,  is  himself  a  chief  clerk,  conducts  the  only  sec- 
tion of  which  the  service  is  composed.^ 

The  comptroller  (without  speaking  further  of  the  local 
chief)  has  "special  charge  of  the  distributions  and  the  con- 
trol over  the  daily  work,"  as  reads  the  circular  note.  Twice 
daily,  he  issues  orders  to  the  squads  of  clerks,  verifies  their 
memoranda,  satisfies  himself  as  to  the  actuality  and  the  effi- 
ciency of  their  work,  in  which  he  participates  as  often  as  pos- 

^  Thus  according  to  the  Annuaire  des  contributions  indirectes  such 
service  of  the  city  includes  eight  comptrollers,  nineteen  senior  clerks,  . 
forty -three  clerks,  and  four  acting  supernumeraries;  the  other  one 
four  comptrollers,  eight  senior  clerks,  twetity-nine  clerks,  and  four  ' 
acting  supernumeraries.  Thus  one  single  comptroller  with  ten,  four, 
eleven,  six,  and  four  senior  clerks  and  clerks  is  sufficient.  In  small 
localities  we  find  only  one  senior  clerk  as  the  station  chief,  with  a 
clerk.  It  is  not  so  much  the  importance  of  the  city  that  regulates 
this  organization;  it  is  much  more  the  nature  and  the  number  of 
tradespeople,  manufacturers,  contractors,  etc.,  who  are  subject  to 
control  by  the  officers  of  the  excise  administration. 


THE  BUDGET 


They 

Notify 

Taxpayers 


Local 
Collectors 
Receive 
Payments 


Field 
Collectors 


sible.  'The  comptroller  directs  the  service  in  which  he  par- 
ticipates." 

The  comptrollers  and  the  squads  of  clerks  under  their 
orders  assess,  through  their  control  and  verifications,  the  taxes 
which  the  taxpayers  must  pay.  As  soon  as  the  notices  to  pay 
taxes,  prepared  on  the  bases  of  these  memoranda  (portatifs) t 
are  delivered  to  the  taxpayers,  their  functions  are  concluded. 
The  aforesaid  taxpayers  pay  the  amounts  entered  on  these 
notices  to  the  special  local  collectors  (receveiirs  particiiliers 
sedentaires)  with  whom  rests  exclusively  the  function  of  col- 
lecting these  taxes.  These  special  local  collectors  issue  re- 
ceipts; keep  the  records;  prosecute,  if  necessary,  delinquent 
taxpayers;  periodically  turn  the  money  over  to  the  collector 
of  finances,  and,  in  a  word,  perform  all  the  functions  of  an 
accountable  officer. 

The  fiscal  organization  for  the  collection  of  indirect  taxes, 
as  soon  as  it  develops  in  a  locality  of  importance,  loses  no 
time  in  acquiring  a  duality  of  functions. 

The  field  collections  made  in  the  country  are  modest  as  to 
their  organization  and  their  operations,  and  have  no  duality. 
The  same  agents  ascertain  and  collect  the  taxes.  Let  us 
limit  ourselves  to  the  study  of  what  is  called  the  general 
service,  excluding  the  assay  services  and  the  service  of  the 
supervision  of  sugar  and  alcohol  factories  which,  as  we  have 
said  above,  are  entrusted  to  specially  qualified  administra- 
tions. 

There  are  about  2,000  field  collectors,  each  of  whom  is  as- 
sisted by  a  senior  clerk.  Thus  almost  4,000  agents  are  spread 
over  the  countryside,  each  having,  on  the  average,  a  district 
of  eighteen  or  nineteen  parishes.  In  this  connection,  however, 
the  average  figure  is  particularly  inaccurate,  because  certain 
stations  have  a  horse  ^  or  two  horses  (one  of  them  belonging 
to  the  clerk  and  the  other  to  the  collector),  or  a  horse  belong- 
ing to  the  collector,  not  to  speak  of  the  carriage  (which  al- 
ways belongs  to  the  collector),  while  certain  other  stations 
have  to  be  covered  on  foot  or  on  bicycles.  The  area  of  the 
district  varies  necessarily,  according  to  the  means  of  locomo- 
tion used  for  covering  the  district  in  question. 

The  field  collector  and  his  chief  clerk  have  the  function  of 

^  In  1870  a  circular  note  stated  that  "the  moment  had  arrived  when 
the  use  of  carriages  in  certain  collection  tours  should  be  substituted 
for  riding  on  horseback."  (Circular  note  of  March  16,  1870.)  There 
are  no  longer  mounted  collectors,  in  the  proper  sense  of  the  word. 

414 


THE  COLLECTION  OF  REVENUES 


assessing  and  collecting  the  taxes  in  the  more  or  less  numerous 
parishes  of  their  district. 

Let  us  start  with  the  assessing  of  the  taxes.  This  consti- 
tutes the  entire  active  part  of  the  work,  which  is  divided  into 
two  kinds  of  associated  operations :  general  supervision ;  veri- 
fications and  inspections. 

The  general  supervision  has  the  purpose  of  ascertaining 
that  the  taxable  materials  carried  over  public  roads  are  prop- 
erly accompanied  by  invoices,  receipts,  declarations,  etc.^  re- 
quired by  the  regulations.  This  is  a  part  of  the  fight  against 
contraband  coming  from  the  outside.  'As  this  species  of  fraud 
never  ceases,  day  or  night,  and  is  liable  to  occur  anywhere 
•even  in  the  remotest  parts,  the  control  must  be  exercised  day 
and  night  on  streets,  highways  and  country  roads,  particularly 
at  hours  and  in  places  most  suspected.  In  case  of  an  ascer- 
tained violation  of  the  law,  minutes  are  taken,  which  minutes 
order  the  attachment  of  the  taxable  material,  and  of  the  means 
ot  conveyance,  without  prejudicing  the  incurred  penalties. 

But  how  does  the  superior  administration  satisfy  itself  that 
the  collector  scrupulously  performs  the  delicate  and  essential 
duties  of  general  supervision?  How  does  the  superior  ad- 
ministration manage  to  follow  up  the  faithfulness  of  the  thou- 
sands of  agents  scattered  over  the  countryside — those  whom 
distance  from  the  center  tends  to  render  too  independent? 
The  old  administrative  rule,  aided  by  the  traditions  of  the 
Ferme  Generale,  introduced  the  most  ingenious  system  of 
control. 

In  each  station  there  is  a  register  of  orders  (registre 
d'ordres)  which  is  intended  for  making  entries  by  the  collector 
at  the  time  of  his  departure;  this  entry  must  contain  the 
itinerary  and  the  duration  of  the  tour.  The  senior  clerk  signs 
the  order;  alongside  of  the  order,  after  the  return  of  the 
collector,  are  entered  the  results  obtained. 

What  happens  in  case  an  inspector  arrives  unexpectedly? 
His  first  duty  is  to  look  into  this  register  of  orders  and  to 
proceed  forthwith  to  the  places  indicated  in  the  latter,  in  order 
to  find  out  whether  the  officer  was  really  at  the  place  indicated 
in  the  itinerary.  Later,  he  will  verify  at  leisure  all  the  previ- 
ous entries  of  this  register  by  comparing  them  with  the  en- 
dorsements entered  in  the  course  of  the  route,  with  memoranda 
and  minutes  brought  from  the  tour — in  a  word,  with  all  the 
information  which  is  likely  to  tally  or  not  to  tally  with  the 
journal  recording  the  everyday  life  of  the  collector. 

415 


Their 
Duties 


The 

Superior 
Adminis- 
tration 
Examines 


Register 
of  Orders 


The 
Inspector 


THE  BUDGET 


The 

Tobacco 

Retailers 


Shipments 
of  Liquor 


The 
Routine 
of  the 
Collector 


The  tobacco  retailers  in  each  parish  keep  register  86c  which 
must  be  inspected  by  the  collector  and  his  clerk  immediately 
after  their  arrival.  Not  only  do  they  inspect  this  register,  but 
they  detach  the  looseleaf,  which  the  collector  fills  out  and  the 
clerk  addresses.  Without  leaving  the  place,  the  officers  put 
this  document  in  a  letterbox  to  be  mailed  to  the  departmental 
director.^  The  postmark  bears  further  evidence  to  the  truth 
and  to  the  date  of  the  tour.^ 

While  en  route j  the  collector  and  the  clerk  record  the  inci- 
dents of  their  travel :  whenever  the  collector  meets  a  transport 
of  liquor  he  signs  with  date  and  signature  and  refers  on  his 
notebook  to  the  invoices  held  by  the  driver;  this  practice  con- 
firms the  presence  of  the  officers  in  the  localities  and  on  the 
dates  specified.  Then,  they  mail  notices  to  the  station  in 
whose  jurisdiction  is  located  the  collectorship  from  which  the 
permits  in  question  are' issued;  thus  the  indications  on  the 
permits  will  show  whether  each  looseleaf  corresponds  with 
the  stub. 

In  the  same  way  the  character  of  entries,  the  dates  and 
the  hours  of  the  minutes  which  the  officers  bring  back  with 
them,  show  the  reality  and  the  thoroughness  of  the  super- 
vision. The  control,  as  we  have  seen,  pursues  every  possible 
method  to  impress  itself  on  the  field  collectors  and  to  com- 
pel them  to  perform,  in  spite  of  their  isolation,  as  exactly  as 
possible  the  official  functions,  on  which  depend  the  proceeds 
of  the  collection. 

The  functions  of  the  collector  become  more  precise  in  the 
verifications  and  controls  to  be  exercised  over  the  various  tax- 
payers. The  latest  statistics  indicate  that  the  total  numlx?r 
of  individuals  subject  to  indirect  taxes  amounts  to  980,000, 
of  whom  477,000  are  retailers  of  liquor  (this  last  number  in- 
cludes the  liquor  retailers  of  Paris),  32,000  wholesale  dealers, 
etc.  Every  field  district  has  a  part  of  this  considerable 
patronage,  and  in  order  to  verify  and  control  it  in  a  methodical 

^  In  case  the  collector  wants  to  feign  a  tour  and  is  a  friend  of  the 
tobacco  dealer  in  a  locality  he  can  ask  the  dealer  to  mail,  on  a  certain 
day,  the  bulletin  signed  in  advance  by  dropping  the  bulletin  into  the 
mailbox.  This  subterfuge,  however,  requires  three  accomplices:  the 
collector,  the  senior  clerk  and  the  tobacco  retailer.  Besides,  the  in- 
spector, by  means  of  unexpected  tours,  can  very  easily  ascertain 
whether  the  register  of  orders  has  been  signed  in  advance. 

2  The  director  who  collects  these  bulletins  compares  them  subse- 
quently with  the  entries  on  the  registers  of  order  and  on  the  memo- 
randa or  has  them  compared  by  the  inspectors. 

416 


THE  COLLECTION  OF  REVENUES 

way,  it  divides  it  into  several  parts,  in  conformity  with  a  daily 
itinerary  which  is  called  the  tour  (tournee). 

These  tours — numbering  seven  or  eight  for  collectors,  who 
cover  them  on  foot,  and  ten  or  twelve  for  collectors  making 
them  on  horseback  or  by  carriage — are  organized  in  such. way 
that  the  entire  district  is  visited  two  or  three  times  each  month. 
Let  us  follow  a  field  collector  on  one  of  these  tours. 

The  register  of  orders  is  first  attended  to,  as  explained  They 
above.  "Immediately  after  that,  the  officers  start  on  their  suppLs, 
trip,"  says  the  circular  note  of  December  i,  1806.  Upon  etc. 
reaching  the  first  commune,  after  having  there  signed  the 
register  86c,  and  after  having  mailed  the  bulletin,  their  official 
functions  begin.  The  collector  and  his  clerk,  equipped  with 
their  working  paraphernalia,  such  as  memoranda,  folding 
gauge,  case  with  alcoholometers,  branding-iron,  etc.,  present 
themselves  at  the  retail  liquor  shops,  not  only  for  the  purpose 
of  control,  but,  since  the  law  of  December  23,  1900,  for  the 
purpose  of  verifying  the  supplies  in  the  cellar  and  releasing 
the  liquor  which  has  recently  arrived  under  a  customhouse 
permit  (acquit-d-caution)  [authorizing  the  conveyance  of 
goods  from  one  lx)nded  warehouse  to  another  after  giving 
bonds  for  the  payment  of  the  duty,  if  they  are  not  re- 
exported]. 
.  The  law  of  December  29,  1900,  was  careful  enough  to  stipu-  Liquor 
late  in  Article  2  that  wines  and  ciders  addressed  to  retailers 
in  localities  with  a  population  of  less  than  4,000  souls  could 
not  be  moved  except  under  acquit-d-caution.  Furthermore, 
this  law  indicated,  in  Article  5,  that  in  case  there  is  no  ef- 
fective and  permanent  control  when  the  liquor  enters  a  local- 
ity, each  individual  who  retails  liquor  is  subject  to  the  visits  of 
officers  of  the  excise  administration,  which  visits  cover  his 
cellars,  storehouses,  etc.  Finally,  Article  6  provides  that  in 
one  and  the  same  commune,  the  same  price  for  liquor  is  bind- 
ing upon  the  retailers,  as  well  as  upon  wholesalers. 

These  various  provisions  enable  the  field  collectors  to  msit 
the  retail  shops  of  a  commune  and  to  satisfy  themselves  in  a 
more  or  less  efficacious  way  as  to  suspicious  operation  of 
which  liquor  may  become  the  subject,  but  this  is  not  required 
by  the  fiscal  law. 

Before  the  law  of  1900  was  passed,  the  officers  in  each 
parish  devoted  the  larger  portion  of  their  time  to  retail 
liquor  stores  which  were  not  permanently  contracted  for. 
Nowadays,  as  the  visits  are  more  rapid  and  less  frequent,  the 

417 


Houses 


THE  BUDGET 


The  Field 
Collector 


The 
Details 
Are 
Endless 


administration  has  changed  the  tours  and  extended  the  dis- 
tances. 

Besides  the  retailers,  the  field  collectors  also  inspect  numer- 
ous and  important  taxpayers,  among  whom  wholesale  dealers 
of  liquors  must  first  be  mentioned.  As  these  merchants  re- 
ceive goods  under  acquit-d-caution  and  are  shipping  them 
with  various  consignments,  according  to  the  particular  case, 
the  officers  upon  arrival  have  only  to  recapitulate  in  the  regis- 
ters of  the  local  collector's  office  ^  the  entries  of  the  movement 
of  incoming  and  outgoing  goods  relating  to  each  bonded  store- 
house, in  order  to  ascertain  its  situation. 

In  case  the  last  verification  was  exact  and  the  verifications 
now  made  are  also  exact,  and  if  between  the  two  verifications 
the  wholesale  dealer  has  committed  no  irregularity,  then  the 
quantity  which  should  be  in  stock  and  the  quantity  which  is 
actually  in  stock  should  balance  each  other  exactly.  It  is  very 
seldom,  however,  that  such  a  balance  is  immediately  obtained, 
particularly  in  storehouses  overfilled  with  merchandise.  When 
it  is  necessary  to  determine  the  contents  of  a  large  number  of 
casks  in  which  the  gauge  does  not  penetrate  perfectly,  or  the 
shapes  of  which  are  irregular  or  which  are  not  perfectly  filled, 
etc. ;  or  when  it  comes  to  weighing,  by  means  of  the  alco- 
holometer, and  rectifying  the  weight  according  to  tempera- 
ture of  liquors  of  all  degrees,  under  conditions  of  defective 
installation — mistakes  of  many  kind  are  liable  to  occur.  In 
the  second  place,  the  evaporation,  leakage,  spillage,  etc.,  do 
their  share  in  reducing  the  amount  of  stock.  The  excise  ad- 
ministration allows  deductions  to  be  made  on  account  of  this 
waste,  which  of  course  influences  the  result  of  the  verification. 
On  the  other  hand,  the  wholesale  dealer  might  .have  made 
shipments  without  invoices,  poured  alcohol  into  his  wines,  etc., 
and  attempted  to  defraud  the  Treasury  by  clandestine  in- 
creases of  his  stock,  etc.  Thus  a  shortage  or  a  surplus  results, 
which  requires  more  precise  verifications  for  special  parts  of 
the  stock  at  least.  Sometimes  a  shortage  is  positively  ascer- 
tained, whereupon  the  taxes  must  be  collected  from  the  rest, 


^  The  officials  find  in  fact  in  the  local  collector's  office,  on  one  hand, 
for  the  newly  arrived  goods  the  acquits-a-caution  which  have  been 
deposited  there  in  order  to  be  released  after  the  shipment  has  been 
verified  upon  arrival;  on  the  other  hand,  covering  outgoing  goods, 
the  stubs  of  invoices  taken  out  by  the  wholesalers  themselves  for  the 
purpose  of  accompanying  the  shipment  of  liquors  sent  out  from  their 
stores. 

418 


THE  COLLECTION  OF  REVENUES 


because  these  shortages  represent  deliveries  made  outside.  As 
for  surpluses,  they  are  subject  to  attachment,  because  they 
can  result  only  from  the  smuggling  in  of  contraband  goods. 

The  collector  eventually  visits  many  other  payers  of  in- 
direct taxes,  owners  of  livery  stables,  brewers,  manufacturers 
of  vinegar,  of  candles,  of  playing-cards;  whiskey  distillers 
for  whom  no  special  service  is  organized,  etc. ;  then  he  in- 
spects the  stocks  of  tobacco  and  powder  in  the  retail  shops. 
Finally,  he  verifies  the  accounts  of  the  holders  of  collector- 
ships,  going  over  them  page  by  page,  making  the  additions 
over  again;  he  inspects  the  calculations  of  the  registers,  puts 
down  the  totals,  collects  the  money  and  takes  it  along  with 
him. 

This,  in  the  main,  outlines  the  functions  of  a  field  collector 
in  each  commune  in  the  course  of  a  tour,  until,  upon  his 
return  to  his  office  in  the  evening,  he  enters  in  the  register 
of  orders  the  results  of  his  various  operations.  While  pro- 
ceeding from  one  commune  to  another,  he  avails  himself  of 
the  opportunity  of  traveling  over  the  highways  at  which  time 
he  exercises  functions  of  special  control  over  the  traffic. 

This  is  where  the  function  of  accountant,  assigned  to  the 
field  collectors,  comes  in  as  a  secondary  duty.  At  the  end 
of  a  three-month  period — (trimestre) — when  the  accounts  of 
all  taxpayers  are  made  out  and  the  individual  notices  to  pay 
are  delivered,  a  special  tour  takes  place.  This  tour  is  called 
the  collection  tour  (tournee  de  recouvrement) ,  during  which 
the  collector  collects  the  taxes  by  calling  at  the  residence  of 
each  taxpayer.  In  the  course  of  this  period  of  three  months, 
when  the  liquidations  show  a  debit,  which  makes  it  worth 
while  to  collect  immediately,  the  collector  delivers  to  the  tax- 
payer a  notice  to  pay  taxes  and  collects  the  amount.  De- 
linquent taxpayers  are  prosecuted  and  the  collectors  are  held 
responsible,  in  case  the  promptness  prescribed  by  the  regula- 
tion is  not  complied  with  in  due  time.  We  shall  discuss  later 
the  extent  of  this  responsibility.  Taxpayers  who  pay  their 
taxes — and,  fortunately,  this  is  customarily  the  case — receive 
from  the  collector  a  receipt  which  is  taken  from  a  stub- 
book.  The  collector,  then,  upon  returning  to  his  office  attends 
to  the  various  registers,  schedules  and  accounting  papers. 

The  funds,  which  are  supposed  to  remain  in  the  treasuries 
of  the  collectors  as  short  a  time  as  possible,  are  delivered 
monthly,  and  even  more  frequently,  to  the  central  fiscal  agency 
of  the  district,  against  a  written  acknowledgment,  which  is 

419 


The  Field 

Collector 

Looks 

After 

Traffic 


He  Col- 
lects Taxes 
from  the 
Individual 


The  Funds 
Collected 


THE  BUDGET 

deposited  in  lieu  of  cash  with  the  main  revenue  station  of  in- 
direct taxes  where  the  records  of  operations  of  its  field  col- 
lectors are  centralized. 


The  De- 
partmental 
Inspector 


He  Inspects 
All  Offices 


Inspectors  and  Directors 

Above  the  executive  agents,  which  we  have  just  reviewed — > 
the  field  collectors  all  over  the  country  and  the  comptrollers 
or  local  chiefs  in  the  cities — appears  the  departmental  inspec- 
tor. As  we  have  said,  there  are  on  an  average  two  inspectors 
per  departement  [grand  administrative  division]  but  more 
frequently  one.  This  superior  officer  "travels  all  over  the 
departement,  and  stops  for  several  days  at  each  station  for 
the  purpose  of  directing  and  examining  into  the  service."  In 
this  he  follows  the  requirements  of  administrative  circular 
notes  defining  his  functions. 

The  number  of  days  which  the  inspector  devotes  to  control 
and  verification,  either  at  his  place  of  residence  or  in  the  field, 
is  fixed  at  twenty  per  month,  not  including  traveling  days. 
The  inspector  verifies  about  three  stations  per  month,  re- 
maining about  a  week  at  each  of  them.  Upon  his  arrival 
at  the  station,  the  inspector  informs  the  director  of  his  being 
there ;  goes  over  the  register  of  orders  and  proceeds  with  the 
verification  of  the  cash  on  hand,  in  case  he  happens  to  be  in 
the  station  of  an  accountable  officer.  Then  he  proceeds  with 
his  field  work.  "The  inspector  controls  the  actions  of  his 
subordinates  in  all  details,  in  office  as  well  as  when  inquiring 
into  the  affairs  of  individual  taxpayers.  He  acknowledges 
his  verifications  by  his  signature."  (Circular  note  of  August 
23,  1852.)  He  personally  takes  part  in  the  verification  and 
control,  because  he  is  not  only  the  agent  of  control,  but  he 
is  also,  above  all,  the  chief  executive  agent.  "He  acts  jointly 
with  the  officers;  and,  by  requiring  them  to  perform  their 
functions  in  his  presence,  the  inspector  presides  over  and 
takes  part  in  the  inquiries  made  at  the  residences  of  tax- 
payers." (Circular  note  of  August  i,  1855.)  The  words 
presides  over  and  takes  part  in  seem  to  summarize  clearly 
the  functions  which  we  are  studying  in  this  connection.  The 
inspector  has  in  all  three  coordinate  functions:  (i)  control 
over  the  present  and  past  management  of  the  officers;  (2)  the 
giving  of  instructions  and  examples  to  them  to  follow;  (3) 
I>ersonal  participation  in  the  service. 

As  far  as  the  first  function  is  concerned,  while  guiding  his 

420 


THE  COLLECTION  OF  REVENUES 

subordinates  in  the  execution  of  the  daily  work,  he  satisfies  HeCom- 
himself  whether,  prior  to  his  appearance,  the  work  has  been   ^3^j.^jg7**^ 
regularly  performed*.    Being  right  on  the  spot  and  having  data  Results 
in  hand,  he  compares  the  result  of  his  own  operations  with 
previous  results  and  ascertains  wherein  they  depart  from  the 
nonnal  or  are  contradictory  or  questionable.    In  case  of  neces- 
sity, he  makes  inquiries  on  all  sides.      Many  old  errors  con- 
cealed [in  general  results]  thus  come  to  the  surface.      The 
schedules  of  proceeds  and  other  documents  are  verified;  the 
correspondence  is  gone  over ;  the  complaints  and  remarks  sub- 
mitted by  the  taxpayers  are  considered,  etc.     Condensing  this 
information  in  a  report  submitted  to  the  director,  the  keen- 
eyed  inspector  leaves  the  district,  as  a  rule,  perfectly  satis- 
fied as  to  the  way  the  officers  use  their  time  during  his  absence. 

As   far  as  the  responsibility  of  the  inspector   for  raising  Inspectors 
the  moral  standard  and  contributing  to  the  instruction  of  his   ^uties^^^^^ 
subordinates  is  concerned,  the  circular  notes  express  them- 
selves in  the  most  explicit  way : 

"The  inspectors,  eager  very  often  to  justify  the  use 
of  their  time  rather  than  to  extend  usefully  the  scope 
of  their  investigations,  limit  themselves  to  short  visits. 
The  inspector  who  fully  comprehends  the  purpose  and 
scope  of  his  mission  proceeds  in  an  entirely  different 
way.  He  must  devote  his  attention  to  the  important, 
commercial  and  industrial  matters,  to  questions  bearing 
on  new  and  special  legislation,  to  circumstances  which 
may  directly  or  indirectly  concern  the  success  of  the  tax. 
.  .  .  Being  constantly  with  the  officials,  he  interrogates  . 
them,  sees  and  remedies  the  weak  points  in  the  instruc- 
tions for  the  conduct  of  their  offices,  and  puts  them  in 
a  position  to  profit  from  his  own  experience."  (Circular 
note  of  April  i,  1889.) 

Recapitulation 

In  a  word,  because  of  his  zeal,  his  authority,  his  experi- 
ence l^eing  thus  devoted  to  the  interests  of  the  administration, 
it  has  often  been  possible  to  run  down  abuses  and  frauds  within 
a  few  days,  and  to  save  large  sums  for  the  Treasury. 

The  sul>director  in  the  capital  city  of  the  district  ^  and 

^  The  sous-directions,  generally  speaking,  exist  only  in  capital  cities 
of  important  arrondissements.    Upon  the  suggestion  of  various  com- 

421 


The 

Reports 
of  the 
Inspector 


The 

Directors 

Prosecute 


THE  BUDGET 

the  director  in  the  capital  city  of  the  departement,  from  their 
central  offices,  permanently  exercise  the  control  which  the  in- 
spector performs  on  the  spot.  These  chiefs  of  the  service, 
either  themselves  or  through  their  clerks,  verify  the  complete 
reports  by  comparing  their  entries  with  the  entries  in  the 
registers  of  order,  and  check  the  stubs  of  the  registers  in  col- 
lectors' offices,  acknowledge  particularly  the  time  of  payments, 
the  reprises,  that  is,  reports  on  final  statements  of  accounts  in 
which  mistakes  either  intentional  or  otherwise  frequently  oc- 
cur. Finally,  receiving  periodically  (as  a  rule  each  month) 
from  the  different  agents  of  the  field  service  and  of  the  ac- 
counting service  a  series  of  documents  combined  for  purposes 
of  control,  they  are  enabled,  through  the  intelligent  examina- 
tion of  the  contents  of  these  documents,  supported  by  in- 
genious comparisons  (and  if  necessary  by  unexpected  visits), 
to  discover  irregularities  and  to  keep  the  service  on  the  alert. ^ 

Generally  speaking,  the  directors  centralize  and  direct  the 
service  of  their  district.  Moreover,  certain  functions  rest 
with  them  personally,  such  as  the  prosecution  of  litigious  mat- 
ters, the  auditing  of  the  acquits-a-caution,  etc. 

The  multiplicity  and  the  intensity  of  control  are  the  char- 
acteristic features  of  the  administration  for  indirect  taxes. 

missions  on  budget  their  number  has  been  decreased.  In  the  dis- 
tricts which  have  no  sous-direction  the  authority  rests  with  the  direc- 
tion, which  in  all  cases  supervises  the  total  of  the  operations  of  the 
departement. 

^  The  directors  and  sub-directors  perform  a  certain  number  of  veri- 
fication tours  each  year. 

A  circular  note  of  the  administration  expresses  itself  as  follows: 
"By  examining  the  lists  of  contents,  lists  of  products,  of  documents, 
of  statistical  and  accounting  nature  .  .  .  the  directors  and  sub-direc- 
tors are  able  to  manage  intelligently  and  follow  effectively  the  work 
oi  their  subordinates.  .  .  .  The  useful  work  of  the  chiefs  begins  in 
the  cabinet  of  the  directors  or  the  sub-directors."  (Circular  note  of 
April  I,  1889.) 


422 


CHAPTER  XXI 
THE  COLLECTION   OF   REVENUES— Continued 

Collection  of  Customs  Duties:  Administrative  Division  for  the  Col- 
lection of  Customs  Duties;  Two  Classes  of  Agents;  Customs  Offi- 
cials; How  Merchandise  Is  Appraised;  Examiners  Must  Have 
Wide  Knowledge;  How  the  Importer  Pays;  Organization  of  the 
Customs  Field  Forces;  The  Brigade  and  Penthiere;  The  Fron- 
tier Guards;  Administration  Tests  Its  Guards;  The  Chain  of 
Responsibility;  The  Universality  of  Control;  Importance  of  the 
Director. 

Administrative  Division  of  Registration  and  Stamps:  The  Personnel 
of  the  Service;  The  Functions  of  the  Collector;  He  Searches  Out 
Fraud;  History  of  the  Individual  Is  Kept;  Deputy  Inspectors 
Check  Up  the  Collectors;  The  Deputy  Inspector  Is  Proved; 
The  Departmental  Director  Commands  the  Inspector  and  the 
Deputy. 

Distinctively  Characteristic  Features  of  the  Services  for  the  Collec- 
tion of  Indirect  Taxes  and  Direct  Taxes:  Paying  Officers  Person- 
ally Responsible ;  Dissimilarity  Between  Direct  and  Indirect  Taxes ; 
Direct  and  Indirect  Taxes  Contrasted. 

General  Inspection  of  Finances:  Duties  of  the  Inspectors;  Supremacy 
of  the  Inspectors;  France  Divided  into  Ten  Districts;  The  Inspec- 
tion Hierarchy. 

Collection  of  Customs  Duties 

Following  the  order  of  importance  of  the  collections,  the 
second  place  among  the  indirect  taxes  should  be  given  to  the 
administrative  division  of  registry  and  stamps.  On  account 
of  the  fact,  however,  that  there  are  so  many  analogies  be- 
tween the  administrative  division  for  the  collection  of  in^ 
direct  taxes  and  that  of  customs,  the  latter  will  be  examined 
first. 

Administrative  Division  for  the  Collection  of  Customs  Du- 
ties. The  administrative  division  for  the  collection  of  customs 
duties  has  "special  charge  of  collecting  duties  on  merchandise 
subject  to  tax  at  the  time  of  its  importation  into  France.  This 
administrative  division  also  collects  various  duties  on  naviga- 

423 


THE  BUDGET 


Two 

Classes  of 
Agents 


Customs 
Officials 


How  Mer- 
chandise 
Is  Ap- 
praised 


tion  and  duties  on  salt  at  the  frontier";  this  yielded,  accord- 
ing to  the  budget  for  191 3,  662,500,000  francs.^ 

The  agents  of  the  local  service  {service  sedentaire)  col- 
lect these  662,500,000  francs;  the  agents  of  the  Held  service 
{service  actif)  limit  themselves  to  searching  for  fraud.  Thus, 
at  the  very  beginning,  we  have  two  perfectly  distinct  classes 
in  the  personnel  of  the  customs  service  in  accordance  with 
the  budgetary  tables  themselves — the  local  service  and  the 
field  service. 

Let  us  begin  with  the  local  service,  which  is  ''the  service 
performed  by  the  customs  bureaus  for  the  purpose  of  classify- 
ing merchandise,  liquidating  the  dues  in  accordance  with  tariffs 
and  making  the  collections." 

In  accordance  with  the  laws,  importers  must  bring  all  mer- 
chandise which  enters  France  directly  to  the  customs  office 
nearest  to  the  frontier.  This  bureau  proceeds  then  with  three 
operations,  specified  by  the  definition  hereinafter  given:  (i) 
inspection  of  merchandise;  (2)  determination  of  the  duties; 
(3)  collection  of  the  duties.  No  collection  could  be  made 
without  determining  the  duties  and  this  is  always  done  on 
the  basis  of  a  certificate  of  inspection.  In  large  customs  of- 
fices, equipped  with  all  facilities  for  the  service,  each  of  these 
three  operations  engages  a  distinct  group  of  agents. 

The  inspection  of  merchandise  is  performed  by  customs  ex- 
aminers {veriUcateurs)  y  under  the  supervision  of  a  local  in- 
spector or  deputy  inspector  {inspect enr  or  sous-ins pecteur 
sedentaire) . 

The  customs  examiners  form  a  picked  body,  which  was 
reorganized  by  the  ministerial  decree  of  January  19,  1892, 
through  the  result  of  the  voting  of  the  new  tariff.^     Their 

^  Duties  on  importation  563,300,000 

Duties  on  statistics  15,100,000 

Duties  on  navigation  11,600,000 

Other  duties,  fines,  etc.  9,800,000 

Tax  on  the  consumption  of  dutiable  salts  24,100,000 

Duties  on  imported  sugar  (estimated)  38,300,000 

Total  662,500,000 

2  The  order  of  December  27,  1883,  has  merged  into  one  single 
hierarchy  all  the  agents  of  the  secondary  personnel,  who  until  then 
had  been,  according  to  their  qualifications,  either  assigned  to  make 
the  inspections  or  handle  the  records  under  the  general  name  of 
comptrollers,  senior  clerks  and  clerks.  The  ministerial  order  of  Janu- 
ary 19,  1892,  has  reestablished  the  separate  classification  of  the  exam- 
iners (verificateurs)  by  giving  to  them  an  additional  allowance  under 


THE  COLLECTION  OF  REVENUES 

functions  consist  of  examming  merchandise — that  is,  deter- 
mining the  nature,  origin,  place  of  production,  weight,  number, 
vokmie  or  value.  Importers  must,  in  the  first  place,  file  a  de- 
tailed declaration;  but  it  is  necessary  that  this  declaration  be 
under  control,  and  if  one  considers  the  customs  tariffs,  this 
task  appears  to  be  particularly  difficult.  For  instance,  take  the 
nature  of  merchandise;  here  alone  there  are  countless  classes 
or  varieties.  As  to  the  quality,  methods  of  manufacture,  com- 
binations and  grades,  there  are  various  classifications  and  sub- 
classifications.^  These  classifications  and  sub-classifications 
are  essential,  however,  because  they  serve  as  bases  for  dif- 
ferent customs  schedules. 

The  determination  of  the  origin  of  the  merchandise — that 
is,  the  country  where  it  was  grown  or  manufactured  ^ — the 
ascertainment  of  the  country  from  which  it  is  being  im- 
ported,^ these  matters  fix  the  point  of  departure;  because,  ac- 

the  name  of  professional  extra-stipend  (indemnite  professionnelle). 
At  times  senior  clerks  can  be  called  upon  for  inspection  service  in 
case  of  need. 

^  If,  for  example,  we  open  the  custom  tariff  on  the  article  pure 
cotton  textures,  we  see  that  the  examiner,  after  having  first  satisfied 
himself  that  the  material  in  question  is  really  pure  cotton  and  not 
jute,  wool,  silk,  linen,  ramie,  etc.,  must  ascertain  whether  this  pure 
cotton  is  unbleached,  twilled,  dyed  in  one  color  or  in  several  colors, 
figured,  with  inwoven  figures,  pique,  bleached,  etc.;  he  must  figure 
the  number  of  threads  per  square  centimeter,  the  relation  of  the 
weight  to  the  volume  per  hundred  square  meters,  etc.;  he  must  de- 
termine whether  the  material  in  question  is  duck,  glazed,  calico, 
dimity,  corduroy,  silkoline,  moleskin,  muslin,  tulle,  knitted  goods, 
laces,  needle  embroidery,  ribbons  or  passementerie. 

The  duty  often  changes  from  the  simple  to  the  double  one  with 
regard  to  materials  which  to  the  unexperienced  eye  are  almost  alike. 

-  The  determining  of  the  origin  of  merchandise  in  a  given  case  can 
be  appealed  before  the  committee  of  legal  examination  (comite 
d' expertise  legale),  which  is  organized  in  the  ministry  of  commerce, 
by  virtue  of  the  law  of  July  28,  1822. 

As  far  as  merchandise  originating  in  French  colonies  is  concerned, 
a  certificate  issued  by  the  local  authorities  facilitates  the  task  of  the 
examiners. 

^  For  instance,  the  resins,  colophony,  resinous  products,  etc.,  taxed 
at  six  francs  per  one  hundred  kilograms,  in  case  they  originate  in 
the  country  from  which  they  are  exported,  are  taxed  eleven  francs 
per  one  hundred  kilograms  if  their  country  of  origin  is  different 
from  their  country  of  exportation.  Moreover,  an  extra  bonded  store 
tax,  in  case  of  the  merchandise  coming  from  some  bonded  storehouse 
in  Europe,  brings  the  total  of  the  tax  to  13.60  francs. 

A  large  number  of  analogous  cases  may  be  found  in  the  tariff. 

The  documents  accompanying  the  shipment  of  goods  constitute  the 

425 


THE  BUDGET 


Examiners 
Must  Have 
Wide 
Knowledge 


How  the 

Importer 
Pays 


cording  to  the  case,  considerable  additional  duties  may  or 
may  not  be  imposed. 

The  examiners  must,  therefore,  possess  a  perfect  industrial 
competency.  Merchandise,  the  value  of  which  is  taxed  more 
than  twenty  francs  per  one  hundred  kilograms,  according  to 
the  regulations  of  the  customs  administration,  must  be  directed 
by  the  importers  to  certain  large  customs  bureaus  designated 
by  the  law,  which  bureaus  have  an  extra  large  personnel. 

After  the  imported  goods  have  been  classified  as  to  their 
nature,  origin  and  source,  it  still  remains  to  weigh,  count  and 
measure  or  appraise  them,  according  to  established  units  of 
collection.  In  this  last  function  each  examiner  is  assisted  by 
a  gauging-examiner  {prepose-visiteur) . 

With  regard  to  the  complete  results  of  the  examination,  en- 
tered on  the  bulletin  of  examination  (bulletm  de  msite),  the 
service  of  the  comptrollers  and  of  the  clerks  in  the  bureaus 
consists  in  consulting  the  volumes  of  tariffs  and  in  applying 
the  rate  indicated  in  these  volumes  to  the  classes  of  goods  and 
to  the  quantities  determined.  This  second  operation  is  called 
the  determining  of  the  duties  (liquidation  des  droits). 

Then  the  importer,  holding  his  bulletin  of  duties  (bulletin 
de  liquidation),  presents  himself  at  the  window  of  the  chief 
collector  ^  or  of  the  special  collector,^  who  proceeds  with  the 
third  and  last  operation,  which  is  the  collection  of  the  duties 
forthwith  and  in  cash,  unless  the  amount  to  be  paid  exceeds 
300  francs.      In  such  event,  if  the  payer  be  a  taxpayer  and 


primary  element  of  information;  these  documents,  however,  must  be 
verified  very  closely. 

^  In  custom  houses  of  the  first. class  the  main  collector,  who  is  en- 
tirely devoted  to  collecting  the  revenues,  takes  no  part  in  other  opera- 
tions of  the  bureau ;  these  are  attended  to  by  the  stationary  inspector, 
who  has  charge  of  the  supervision  and  direction  of  these  operations. 
In  other  custom  houses  the  entire  work  (with  the  exception  of  the 
examination  work,  particularly  if  there  is  a  deputy  inspector  at- 
tached) is  under  his  direction  and  control. 

Besides  these  personal  functions  of  collection,  the  main  collector 
centralizes  the  revenue  and  the  accounting  work  of  all  the  offices  of 
his  district,  pays  the  expenditures,  prosecutes  controverted  matters, 
etc.;  he  is  directly  under  the  jurisdiction  of  the  Cour  des  Comptes. 

2  The  subordinate  collectors  act  on  the  responsibility  of  the  main 
collector,  with  whom  they  settle  their  accounts  once  a  month.  The 
verification  of  the  work  done  by  subordinate  officers,  on  the  spot,  does 
not  enter  into  the  functions  of  the  main  collector,  who  never  leaves 
his  official  place  of  residence.  This  kind  of  control  is  performed  by 
the  divisional  inspector  (inspecteur  divisionnaire) . 


426 


THE  COLLECTION  OF  REVENUES 

he  so  desire,  he  may  sign  an  interest-bearing  bonded  agree- 
ment, which  becomes  due  after  four  months. 

The  preceding  description  refers  only  to  merchandise  which 
involves  the  immediate  payment  of  duties.  In  case  of  transit, 
storing  in  a  bonded  warehouse,  or  in  case  of  temporary  ad- 
mission, the  verifications  have  either  a  more  summary  or  a 
more  specific  character.  With  regard  to  merchandise  which 
is  exported  and  not  subject  to  a  tariff,  the  declaration  of  the 
shipper  is  always  required  by  law,  so  as  to  bring  the  transaction 
into  the  statistics  for  commerce.  The  instructions,  however, 
recommend  that  the  officers  do  not  proceed  to  the  point  of 
opening  the  bales,  except  in  rare  cases,  and  then  only  using 
the  greatest  consideration.^ 

Customs  officers  of  little  importance — directed  by  special 
collectors  or  by  holders  of  collectorships — perform  in  principle 
the  three  operations  described  above. ^  The  only  care  that 
one  must  exercise  is  to  distinguish  for  himself  the  three  opera- 
tions. Taking  an  extreme  example  at  the  very  bottom  of 
the  service  ladder,  the  collector  in  a  locality  which  is  little 
frequented,  who  manages  his  office  alone,  may  not  even  be 
aware  of  the  fact  that  when  collecting  duties  on  a  shipment, 
he  is  actually  performing  the  three  separate  functions  of  mak- 
ing an  examination,  determining  the  duties  and  collecting  the 
amounts  due.  His  modest  work,  however,  includes  uncon- 
sciously the  three  operations,  which  are  separately  performed 
at  the  larger  offices. 

If  the  field  service  did  not  drive  importers  to  the  customs 
offices  situated  at  the  termini  of  the  highways  of  traffic,  these 
customs  offices  would  be  sadly  lacking  in  business.  The  same 
would  be  the  case  with  field  collectors  of  indirect  taxes,  who 
have  to  collect  the  droits  an  comptant.    These  field  collectors, 

^  "As  far  as  exports  are  concerned,  in  order  not  to  create  hin- 
drances to  commerce  the  service  procedure  generally  admits  without 
verification  the  declarations  made  by  the  interested  parties,"  says  the 
circular  note  No.  2357  of  October  31,  1893.  But,  adds  this  note,  as  it 
is  to  be  feared  that  these  declarations  are  not  always  made  with  the 
necessary  care,  it  is  necessary  to  remind  the  public  of  the  provisions 
of  the  law  of  May  16,  1863,  and  of  the  fines  in  case  of  their  violation. 

2  While  the  custom  house  of  Rouen  is  provided  with  local  inspec- 
tors, with  about  a  score  of  examiners,  about  thirty  comptrollers,  senior 
clerks  and  clerks,  and  one  main  collector,  we  find  at  Saint-Servan 
only  one  special  collector,  one  assistant  examiner  and  one  clerk;  at 
Wattrelos,  one  special  collector  and  one  clerk;  at  Duclair,  a  collector 
alone. 

427 


THapilj^GET 

however,  combine  their  fuj^p^ns  of  supervision  with  the  func- 
tions of  collection,  whilM^this  connection  the  importance 
of  the  supervision  is  such^hat  captains,  lieutenants,  first  ser- 
geants and  excise  agents  devote  themselves  exclusively  to  it. 

Organisation  of  the  Customs  Field  Forces:  Day  and  night 
an  army  of  20,000  men  encircles  the  country  in  a  continuous 
belt,  a  living  wall,  not  leaving  a  gap  for  importations  from 
abroad  except  over  the  regular  roads  of  communication.  Let 
us  examine  this  organization  work  in  the  field  by  beginning 
at  the  bottom  of  the  hierarchy,  which  means  with  a  brigade. 
The  brigade — the  elementary  unit  of  the  field  service  of 
the  customs  administration — is  composed  of  a  first  sergeant 
(brigadier),  who  is  in  command  of  one  or  more  sergeants 
(sous-brigadiers) ,  and  of  a  certain  number  of  agents  (pre- 
poses). 
The  Two  varieties  of  brigades  must  be  distinguished :  traveling 

Brigade  brigades  (brigades  ambulantes)   and  frontier  brigades   (bri- 

Pent/ti^re  Qcides  de  ligne) .  The  first  are  mobile  forces  entrusted  to  cap- 
tains or  to  inspectors,  in  order  to  form  the  connecting  link, 
to  support,  to  investigate  and  to  supervise  the  work  of  the 
frontier  brigades. 

The  frontier  brigades  have  charge  of  the  permanent  patrol 
of  a  stretch  (penthiere)  of  the  frontier,  of  six,  eight  or  ten 
kilometers,  according  to  the  configuration  of  the  country,  the 
end  of  one  patrol  being  terminated  at  the  beginning  of  an- 
other. 

,The  service  on  the  patrol  is  organized  as  follows:  (i)  Ob- 
servations and  sentry  duty  during  the  day;  (2)  ambushes 
[watch  stations]  and  patrols  during  the  night.  The  observa- 
tions and  sentry  duty  during  the  day  ^  are  relatively  easy ;  a 
limited  number  of  men  is  sufficient  to  perform  this  service. 
Night  duty,  on  the  contrary  (when  darkness  favors  any  fraud- 
ulent enterprise,  in  the  solitude  of  the  countryside,  of  the  for- 
ests and  mountains),  becomes  arduous  and  even  hazardous; 
it  furnishes  a  true  picture  of  the  life  of  an  officer  of  customs 
(douanier)^  in  all  its  intensity. 

^  The  observations  are  made  either  under  way  or  at  the  place  of 
residence,  either  openly  or  in  secret,  according  to  the  necessity,  the 
time  and  the  locaHty;  an  observation  ordinarily  lasts  six  hours  and 
sentry  duty  two  hours. 

2  The  guard  over  the  waterfront  of  the  country,  which  we  do  not 
describe  in  this  connection,  is  performed  in  a  much  easier  way,  be- 

428, 


THE  COLLECT 


REVENUES 


Each  evening,  the  first  serges^B^ives  the'  orders,  that  is, 
designates  the  number  of  agenBJKho  will  have  to  go  on 
watch, ^  indicating  at  the  same  tim^the  exact  location  of  the 
stations.  The  record  of  work  (registre  de  travail) — ^which 
shows  the  'order  given  and  which  is  analogous  to  the  register 
of  orders  of  the  field  collectors  of  indirect  taxes — is  kept  in 
the  local  office  of  the  guards.  The  agents  on  duty,  after  they 
reach  the  designated  place,  establish  themselves  for  the  night ; 
they  have  to  stay  awake  ready  to  hear  the  slightest  noise,  to 
be  on  the  jump  at  the  first  signal,  to  be  ready  to  answer  any 
call.  In  case  of  an  alarm,  a  rifle  shot  is  the  signal  for  the 
entire  brigade  to  assemble. 

The  agents  thus  put  on  sentry  duty  for  the  purpose  of  de- 
tecting any  possible  attempt  at  smuggling  need  in  turn  to  be 
watched  pretty  closely.  Night  duty  is  hard,  as  we  have  said ; 
zeal  may  slacken  when  a  man  is  isolated ;  in  the  dark,  tempta- 
tions of  all  sorts  acquire  an  unknown  force. 

The  first  precaution  of  the  administration  consists  in  satis- 
fying itself  that  each  agent  has  really  departed  for  the  post 
to  which  he  was  assigned — that  he  did  not  go  home  or  else- 
where by  a  roundabout  way  after  the  order  was  given.  Then, 
the  administration  satisfies  itself  that  sleep  did  not  overcome 
any  of  the  agents  at  the  places  where  they  were  camping, 
that  they  did  not  seek  shelter  in  some  neighbor's  house,  that 
their  arms  and  their  equipment  were  ready  for  any  emergency, 
that  they  did  not  fail  to  detect  any  noise  in  case  of  danger, 
and,  above  all,  that  they  did  not  sell  their  honor,^  cases  of 
which  are,  fortunately  and  much  to  the  credit  of  our  country, 
extremely  rare.     In  a  word,  are  not  the  meshes  of  the  net 


The 

Frontier 

Guards 


Adminis- 
tration 
Tests  Its 
Guards 


cause  of  the  extent  of  the  country  which  can  be  covered  by  sight  and 
because  of  the  difficulties  of  approaching  the  coast  at  certain  points. 

^  The  agents  while  on  ambush  duty  stay  awake  and  rest  in  shifts, 
lasting  generally  two  hours  each.  Well-chosen  places  for  ambushes 
must  give  the  watcher  the  opportunity  to  see  a  long  distance  around 
him,  while  he  himself  must  remain  invisible.  (The  agents  are  for- 
bidden to  talk  and  to  smoke.  For  the  last  few  years  the  ambushes 
have  been  replaced  by  patrols  to  which  almost  all  of  the  above  rules 
apply.) 

2  The  administration  has  constantly  endeavored  to  raise  the  salaries 
of  the  agents  in  order  to  increase  their  financial  independence.  In 
1889  the  minister  stated  the  progress:  "The  salaries  of  the  customs 
agents  in  active  service  amounted  to  650  francs  per  man  in  1854;  in 
1867  they  received  from  800  to  850  francs.  Since,  they  have  been 
increased  to  a  figure  varying  between  900  and  1,050  francs,  according 
to  the  classes.    We  have,  therefore,  done  what  we  could."    (Chamber 

429 


THE  BUDGET 


The  Chain 
of  Re- 
sponsibility 


which  encircles  France  on  all  sides  liable  to  be  broken  at  some 
place  ? 

The  first  sergeant,  in  order  to  supervise  his  men,  uses  the 
thousands  of  bits  of  information  which  he  gets  through  his 
acquaintances  in  the  neighborhood ;  besides,  he  makes  frequent 
personal  tours.  The  first  sergeant,  however,  through  the  con- 
stant opposition  of  his  subordinates,  might  finally  slacken  in 
zeal  and  become  a  routine  man,  if  he  were  not  properly  sup- 
ported. 

Above  him  are  lieutenants  and  captains  who  have  no  other 
function  than  to  go  from  one  brigade  to  another,  both  day 
and  night,  to  inspect  the  conditions  of  the  service  on  the  spot. 
At  night,  lantern  in  hand,  they  visit  the  guard  stations  in  or- 
der to  consult  the  record  of  work,  which  they  sign  in  order 
to  enable  their  own  superiors  to  check  them  in  turn;  then, 
they  go  out  to  look  for  the  guards  (preposes)  at  designated 
points;  satisfy  themselves  that  the  positions  occupied  are 
proper ;  pass  from  one  hiding  place  to  another,  without  failing 
to  put  down  their  own  observations  and  actions  in  order  to 
enter  them  later  in  their  journals.  Next  morning,  when  re- 
porting, the  guards  who  have  been  on  duty  detail  these  night 
visits,  the  dates  of  which  the  directors  ultimately  compare  with 
the  entries  in  the  journal  of  the  tour. 

The  captain,  in  his  more  extended  district,  duplicates  the 
work  of  a  lieutenant  both  day  and  night. 

Finally,  the  divisional  inspector  ^  supervises  the  captains, 
the  lieutenants  and  the  brigades  by  means  of  making  continu- 
ous tours.  The  traveling  brigades,  which  he  must  p>ersonally 
conduct,  reen force  the  frontier  brigades;  and,  while  supporting 
the  latter,  discover  the  gaps  in  their  work.  The  number  of 
agents  reaches  14,624;  the  number  of  first  sergeants  and  ser- 
geants, 3,600;  over  them  are  329  first  and  second  lieutenants, 
169  captains,  125  chief  inspectors  and  inspectors. 

of  Deputies,  session  of  July  2,  1889.)  Since  then  the  salaries  of  the 
agents  have  shown  an  increase  of  their  average. 

According  to  the  budget  of  1913  there  are  14,624  agents  receiving 
salaries  ranging  from  1,100  to  1,400  francs,  v^^hich  amounts  to  a  total 
of  18,280,000  francs. 

^  The  divisional  inspector,  placed  under  the  immediate  orders  of 
the  director,  supervises  not  only  the  service  of  the  brigades  but  also 
the  service  of  the  bureaus  of  which  we  have  spoken  above.  For 
this  purpose  he  checks  up  the  main  collectors  and  the  subordinate 
collectors,  acknowledges  their  collections,  goes  over  their  records  and 
verifies  their  accounting  work,  etc. 


THE  COLLECTION  OF  REVENUES 

Besides  the  verifications  by  their  chiefs,  the  brigades  control 
each  other  reciprocally  by  the  following  ingenious  procedure : 
Each  morning  at  daybreak,  two  groups  of  agents  start — one 
from  the  guardhouse  to  the  right  and  the  other  to  the  left — 
conducted  by  the  first  sergeant  or  the  sergeant,  in  order  to 
scour  the  country  ^  as  far  as  the  boundary  line  or  the  penthiere, 
in  order  to  effect  the  rebat  et  contre-rebat.  There  they  meet  a 
detachment  of  the  neighboring  brigade  similarly  engaged ;  with 
this  detachment  they  exchange  vises  and  observations.^  The 
■purpose  of  these  scouting  expeditions  is  to  find  out  in  the 
morning,  through  inspection  of  the  ground,  the  possible 
passage  of  smugglers  through  the  night.  In  case  footprints 
are  discovered,  the  superiors  are  notified  immediately,  the  trail 
is  followed  in  two  directions — that  taken  by  the  smugglers, 
and  that  whence  they  came.  Did  the  road  which  the  smug- 
glers followed  approach  a  post  of  ambush?  If  so,  why  did 
the  men  on  sentry  duty  fail  to  hear,  or  to  see  anything?  What 
were  they  doing?  Were  they  asleep,  or  absent?  An  inquiry 
is  then  begun  which  reveals,  perhaps  better  than  tours  of  su- 
perior officers,  the  defects  of  the  service. 

Two  and  often  three  lines  of  excise  control,  organized  and 
supervised  in  the  way  described  above  and  reen  forcing  each 
other  in  a  concentric  way,  are  thrown  around  the  frontiers  on 
land.  The  first  line  only  is  absolutely  continuous.  This  line 
is  defined  as  ''an  interrupted  sequence  of  posts,  which  com- 
municate l^etween  themselves."  The  brigades  of  the  second 
line,  placed  at  the  interior  extremity  of  the  customs  region 
(rayon  de  doiianesY  serve  as  a  defense  of  particularly  danger- 
ous points,  and  to  catch  smugglers  who  may  escape  the  meshes 
of  the  net  at  the  outer  frontier  line. 

As  we  see,  the  control  hovers  over  every  part  of  the  service ;  The  Uni- 
the  superior  agents  are  just  as  much  subject  to  this  control   versalityof 
as  the  subordinates.    Owing  to  this  control,  the  field  personnel,     **"*''°' 
constantly  kept  on  the  alert,  succeeds  in  blockading  success- 
fully by  day  and  by  night  5,000  kilometers  of  frontier  line; 

^If  we  should  go  into  detail,  we  would  have  made  a  distinction 
between  the  rebat  de  jonction,  the  rebat  croise,  the  rebat  brise,  the 
rebat  a  la  lanterne. 

2  Thus  certain  stories,  more  or  less  amusing,  communicated  at  the 
point  of  contact  of  the  rebats,  made,  it  is  said,  the  round  of  France 
and  back  to  their  original  author. 

^  The  frontier  region  is  a  zone  of  two  and  one-half  myriameters 
within  which  the  law  gives  special  privileges  to  the  agents  of  the 
customs  service. 


THE  BUDGET 

and  the  Treasury  collects  400,000,000  of  [customs]  revenues, 
which  pour  in  through  the  collection  offices.  This  tax-con- 
stabulary (gendarmerie  de  I'impdt),  according  to  the  justified 
expression  of  one  of  the  chiefs  of  the  customs,^  protects  not 
only  its  own  taxes  but  also  the  taxes  and  the  monopolies  placed 
.  under  the  management  of  the  administrative  division  of  indi- 
rect taxes,  the  duties  on  liquor,  on  playing  cards,  on  gold  and 
silverware,  the  monopolies  of  tobacco,  powder  and  matches. 
Thus  more  than  1,500,000,000  of  revenues,  strictly  speaking, 
offset  the  costs  of  collection,  and  reduce  the  percentage  con- 
siderably below  the  apparent  rate. 

Finally,  as  we  have  insisted  so  much  upon  the  necessity  of 
the  control,  which  has  occasionally  shown  its  defects,  it  seems 
only  proper  to  remember  that  the  acts  of  devotion  and  defense 
of  the  interests  of  the  Treasury,  rendered  by  the  officers  of  the 
field  service,  have  been  collected  by  several  authors  under  the 
title  Histoire  du  Drapeaii.^  This  book  contains  splendid  pages 
laudatory  of  the  French  administration  of  customs. 
Importance  Over  these  double  series  of  agents  described  above,  agents 
DireSor  ^^  ^^^  ^^^^^  scrvice  and  agents  of  the  field  service  are  directors 
in  each  district  (circonscription) .  These  districts,  assigned  to 
the  directors,  are  no  longer  the  departements,  as  was  the  case 
with  the  other  fiscal  administrations,  but  are  frontier  regions 
shaped  according  to  the  needs  of  the  service,  numbering 
twenty-three.^  The  functions  of  the  directors  are  those  which 
naturally  are  incumbent  upon  chiefs  of  service  who  depend 
directly  upon  the  Executive,  and  who  give  orders  in  the  latter's 
name  to  the  entire  personnel.  The  director  decides  on  the 
tours  of  the  inspectors,  the  deputy  inspectors,  and  receives 
their  reports.  He  drafts  the  instructions  for  the  service,  set- 
tles disputed  questions  submitted  to  him,  attends  to  the  cor- 
respondence with  the  central  administration,  to  which  he  sub- 
mits semi-annual  reports.     Matters  of  dispute,  matters  of  ac- 


^  Speech  of  the  director  general  and  government  commissioner. 
Chamber  of  Deputies,  March  15,  1895. 

2  La  monographie  des  directions  de  douancs,  by  M.  Barbier,  retired 
director,  volume  published  in  1890,  devotes  to  each  district,  under  the 
name  of  the  "Histoire  du  Drapeau,"  summary  of  main  incidents 
which  have  occurred. 

3  Thus,  the  departement  du  Nord  includes  three  directors  of  cus- 
toms— at  Valenciennes,  Lille  and  Dunkirk;  while  the  director  at 
Saint-Malo  includes  three  departements:  de  la  Manche,-  C6tes-du- 
Nord  and  Ille-et-Vilaine. 


THE  COLLECTION  OF  REVENUES 

counting,  and  of  issuing  payment  vouchers  for  expenditures 
enter  into  his  special  sphere  of  competency. 

Administrative  Division  of  Registration  and  [Stamps] 

The  administrative  division  of  registration  ^  (Administra- 
tion fie  r enregistrement) — •" which  has  charge  of  collecting  the 
fees  for  registration,  for  stamps,  recording  (greffe)  mort- 
gages and  the  taxes  of  four  per  cent  on  movable  securities" — 
takes  in  about  1,000,000,000  francs.^ 

The  personnel  charged  with  ascertaining  and  collecting  this   The 
1,000,000,000  francs  is  organized  in  a  much  simpler  way  than  ^f  7h""^^ 
is  the  personnel  which  has  charge  of  collecting  the  indirect   Service 
taxes  and  the  customs  duties  and  is,  as  a  consequence,  easier 
to  descril^e.      The   personnel  includes  87  directors,    108   in- 
spectors, 466  deputy  inspectors  and  2,800  collectors.^ 

At  the  bottom  of  this  official  ladder,  and  in  direct  contact 
with  the  public,  is  the  collector.  The  collector  of  registration 
has  permanent  residence  in  the  capital  of  the  canton."*  As,  ac- 
cording to  the  budget,  there  are  alx>ut  2,800  collectors,  this 
means  that  there  is  about  one  collector  for  each  canton.^    The 

^  "The  law  on  registration,"  says  Troplong,  "is  for  us  legal  students 
the  noblest,  or  better,  the  only  noble  one  among  the  fiscal  laws.  The 
latter  refers  only  to  material  objects,  which  they  tax  as  far  as  the 
material  side  is  concerned.  The  registration  law  is  not  limited  to 
the  perpetual  contact  with  the  material  side.  It  enquires  more  into 
the  tax  on  a  thing  than  into  a  thing  itself."  (Gazette  des  Tribunaux, 
July  20,  1830.) 

-  This  1,000,000,000  francs  is  divided  as  follows  according  to  the 
figures  of  the  budget  plan  for  1913: 

Registration,  recording  and  mortgaging  777,600,000 

Stamps  274,100,000 

Tax  on  stock  exchange  transactions  17,400,000 

Tax  on  revenue  from  movable  property  119,600,000 


Total  1,188,855,000 

^  Figures  of  the  budget  for  1913. 

'*  The  collectors  of  the  registration  duties  are  paid  by  means  of 
remittances  which  are  proportionate  to  the  amount  of  revenues  of 
their  bureau,  whereby  a  minimum  is  guaranteed  in  each  class.  (De- 
cisions of  March  9,  1889,  of  February  11,  1901,  etc.) 

•"^  A  decree  of  August,  1908,  abolished  at  once,  in  conformity  with 
the  desire  of  the  commissions  on  budgets,  120  bureaus  of  registration, 
"the  maintaining  of  which  did  not. seem  to  be  indispensable  for  the 
interest  of  the  service."  The  number  of  collectors  given  above  will 
therefore  be  reduced  proportionately,  if  this  measure  is  ever  enforced. 


THE  BUDGET 


The 

Functions 
of  the 
Collector 


He 

Searches 
Out  Fraud 


functions  of  a  collector  are  essentially  of  an  office  character. 
The  law  of  May  27,  1791,  specified  them  as  follows:  "The 
office  shall  be  open  to  the  public  every  day,  excepting  Sundays 
and  holidays;  it  shall  be  open  without  interruption  from  8 
A.M.  until  4  P.M."  Thus  from  8  A.M.  to  4  P.M.  the  collector 
does  not  leave,  or  better  say  should  not  leave,  his  office.  Once 
his  office  hours  are  over,  he  is  perfectly  free  to  do  as  he  pleases. 

What  are  exactly  the  functions  during  these  continuous  eight 
hours  of  duty?  "He  receives  the  declarations  of  the  tax- 
payers, records  the  documents  presented  by  parties  or  officers 
of  the  ministries  and  collects  the  fees  due  on  such  registration." 
These  few  words  describe  his  work,  which,  as  is  easily  seen, 
is  made  up  of  two  operations,  those  of  ascertaining  and  of 
collecting.  According  to  an  administrative  circular  note,  regis- 
tration is  "a  formality  which  consists  of  a  material  entry  of  a 
document  or  a  declaration  on  special  registers  kept  by  the 
agents,  for  which  a  fee  is  collected  for  the  benefit  of  the  Treas- 
ury." (Instruction  No.  161 1.)  In  consequence,  documents 
or  declarations  presented  by  public  or  ministerial  officers  or  by 
private  parties  have  first  to  undergo  an  examination  by  the  col- 
lector. The  collector  investigates  their  character,  ascertains 
the  object  of  the  agreement  without  paying  attention  to  the 
form,  which  is  often  delusive;  analyzes  the  numerous  inde- 
pendent provisions;  determines  the  taxable  matter  in  accord- 
ance with  the  official  rates,  and  finally  settles  the  amount  of 
the  fees.  As  soon  as  the  fees  are  determined  he  collects  them, 
and  proceeds  to  abstract  on  his  registers  the  contents  of  the 
exhibits,  following  the  order  of  the  document;  or  he  may 
follow  the  order  which  seems  to  him  the  clearer.  In  the  case 
of  a  document,  a  receipt  is  attached  to  the  bottom  of  it,  indi- 
cating the  volume  and  the  page  of  the  register  and  the  amount 
of  the  fee.  So  far  as  declarations  are  concerned,  special  re- 
ceipts are  issued. 

After  the  operations  demanded  by  the  public  are  thus  com- 
pleted, the  collector  must  still  control  them:  the  registrations 
made  by  him  forthwith  are  done  subject  to  subsequent  verifica- 
tions. He  then  devotes  himself  to  a  search  for  fraud,  a  search 
of  an  official  character,  performed  in  the  room;  this  search 
goes  from  one  register  to  another,  through  dust-covered  vol- 
umes; such  a  hunt  is  often  not  only  productive,  but  even  very 
exciting.  The  folios  which  decorate  the  shelves  of  the  office 
contain  much  information  and  many  references  as  to  the  value 
of  property  transferred  or  rented,  as  to  the  value  of  estates, 

434 


>  THE  COLLECTION  OF  REVENUES 

as  to  the  nature  of  the  estates,  as  to  corporations  formed  and 
dissolved,  as  to  the  shares  of  properties  (apports)  and  settle- 
ments, as  to  the  dividing  up  of  property,  etc. ;  in  a  word,  in- 
formation and  references  to  all  actions  of  the  legal  life  of 
every  citizen.  The  great  difficulty  consists  in  finding  and 
grouping  at  any  desired  moment  the  information  resulting 
from  these  facts.  For  this  purpose,  the  excise  administration 
formerly  used  tables  arranged  like  registers;  these  tables  had 
different  titles,  such  as  the  tables  of  purchase  and  of  new 
owners,  of  vendors  and  former  owners,  a  table  of  leases,  of 
marriage  contracts,  of  testaments,  of  estates  and  of  absences. 
Since  1866,  by  initiative  of  M.  Roy,  Director  General,  a  single 
general  register'^  {Repertoire  general)  has  been  substituted 
for  them ;  "this  register  combines  in  one  entry,  under  the  name  History 
of  each  taxpayer  the  various  acts  of  his  civil  life,  relating  to  ind/*^dual 
his  person  and  his  properties."  ^  There  are  entered,  both  on  is  Kept 
the  credit  and  on  the  debit  side :  the  acts,  the  facts,  the  trans- 
fers of  property  which  are  liable  to  bring  about  the  assessment 
of  taxes.  This  open  account  is  supplemented  not  only  by  the 
information  which  the  collector  gathers  in  his  own  district, 
but  also  by  the  information  which  all  his  colleagues  transmit 
to  him  eventually  from  one  end  of  France  to  the  other.  For 
this  purpose,  a  system  of  exchanges  {renvoisY  has  been  or- 
ganized, which  constitutes  an  agency  of  mutual  information 
among  the  bureaus. 

As  soon  as  a  payment  falls  due,  the  balance  sheet  of  the 

1  The  general  register  {Repertoire  general)  has  been  already  estab- 
lished in  Belgium  and  has  been  in  force  there  since  January  i,  i860, 
to  the  full  satisfaction  of  the  administration.  As  Belgium  differs 
very  little  from  France,  the  same  law  of  the  year  VII  of  the  Repub- 
lic covering  the  matter  of  registration  has  proved  the  contention. 
Thus  a  circular  note,  No.  2320,  of  November  29,  1865,  did  not  hesi- 
tate to  introduce  this  reform  in  France,  beginning  with  January  i, 
1866. 

2  The  institution  of  the  general  register  has  caused  very  vivid 
criticism,  first  because  of  the  excess  of  work  resulting  for  the  officers, 
a  condition  which  subsequent  circular  notes  have  attempted  to  rem- 
edy; and,  furthermore,  on  account  of  the  similarity  of  the  first  and 
last  names,  which,  in  certain  localities  particularly,  result  in  constant 
confusions.  Nobody  thinks,  however,  any  longer  about  returning  to 
the  old-time  tables. 

^  The  renvois  are  "memoranda  received  occasionally  by  a  bureau 
relating  to  the  financial  situation  of  taxpayers  who  are  within  the 
jurisdiction  of  another  bureau  to  which  this  information  is  communi- 
cated." 

435 


THE  BUDGET 


Deputy- 
Inspectors 
Check 
Up  the 
Collectors 


taxpayer  is  consulted  ^  and  compared  with  the  figures  on  the 
declarations,  to  discover  whether  there  is  an  intentional  or 
unintentional  omission.  When  a  death  is  announced,  for  in- 
stance, an  event  which  the  fiscal  administration  watches  very 
closely,  the  table  of  inheritances  makes  it  possible  at  once  to 
see  whether  or  not  the  heirs  have  submitted  their  declaration 
in  the  regulation  space  of  time.  Then  the  general  register, 
going  still  further,  indicates  whether  all  the  properties  of  the 
de  cujus  are  entered  in  the  declaration  and  whether  their 
values  conform  to  those  of  former  estimates.^  Each  document 
submitted  for  registration  gives  an  opportunity  for  analogous 
comparisons.  Documents  control  documents.  A  careless  word 
in  the  draft  of  a  contract,  due  to  an  individual  or  often  to  an 
absent-minded  notary  public,  puts  the  astute  agent  on  the  trail 
of  fraud.  Sooner  or  later,  some  incident  or  some  procedure 
brings  back  to  life  all  the  matters  which  were  concealed  in 
the  shade  of  the  fraud.  The  collector,  eager  to  protect  the 
interests  of  the  Treasury,  cannot  fail  to  detect  them.  In  brief, 
in  this  connection  as  well  as  with  regard  to  indirect  taxes  and 
in  other  connections,  the  local  agent  of  the  administration  is 
largely  responsible  for  the  taxes. 

The  next  thing  is  to  control  the  collector  himself.  In  offices 
of  registration,  this  control  assumes  a  special  form,  exclusively 
of  an  inside  office  character,  as  the  facts  are  not  of  a  passing 
or  temporary  nature  as  is  the  case  with  the  indirect  taxes  or 
with  customs  duties.  The  registers,  which  may  not  be  taken 
from  the  office,  are  always  at  the  disposal  of  those  who  desire 
to  examine  and  reexamine  them;  they  offer  to  the  superior 
agents  all  the  facilities  necessary  for  checking  up  at  leisure 
the  statements  made,  and  to  revise  them  until  the  end  of  the 
statute  of  limitations.^  The  control  in  the  administrative 
division  of  registration  consists  simply  in  going  several  times, 
on  the  premises  of  the  office,  through  the  same  operations. 
Two  classes  of  superior  officers  perf onu  these  functions :  first 
the  deputy  inspectors  and  then  the  inspectors. 


^  Cards  or  mobile  bulletins  (bulletins  mobiles),  arranged  in  alpha- 
betical order,  permit  reference  to  the  folios  of  the  general  register. 

2  Beside  the  repertoire,  the  collectors  look  everywhere  for  informa- 
tion which  is  likely  to  throw  light  on  the  financial  situation  of  the 
de  cujus. 

3  The  statute  of  limitation,  which  the  parties  have  against  the  ad- 
ministration of  the  registration,  runs  for  one  year,  two,  five,  ten  or 
thirty  years,  according  to  the  case. 


436 


THE  COLLECTION  OF  REVENUES 

The  deputy  inspectors,^  four  or  five  for  each  departement, 
have  the  special  function  of  revising  page  by  page,  without 
omission,  the  registers  of  the  collectors,  not  making  tests,  but 
in  a  continuous  way.  All  figures  and  calculations  are  made 
over  again,  step  by  step ;  all  liquidations  are  revised ;  all  inves- 
tigations renewed,  either  in  the  bureau  or  outside,  in  public 
stores,  in  the  offices  of  notaries  pubHc,  of  ministerial  officers, 
etc.2  Not  only  are  errors,  omissions  and  material  mistakes 
thus  necessarily  ascertained,  but  discoveries  are  made  of 
sources  which  have  hitherto  escaped.  A  deputy  inspector  is 
always  bent  on  furnishing  proof  of  his  ability  and  of  his  zeal 
by  making  new  discoveries.^  After  having  spent  a  longer  or 
shorter  period  of  time  in  each  bureau,  according  to  its  im- 
portance— usually  about  a  month — the  deputy  inspector  offi- 
cially gives  the  page  of  the  register  he  has  reached,*  in  order 
exactly  to  hmit  the  responsibilities  and  to  enable  either  himself 
or  his  successor  to  know  where  to  resume  the  work.  The 
deputy  inspectors,  then,  ''revise  without  omission,  and  by  com- 
plete periods  or  regies,  the  work  of  the  collectors  and  proceed 
with  outside  verifications  in  the  offices  of  ministerial  officials 
and  at  the  seat  of  the  different  societies  designated  by  the 
law." 

The  deputy  inspector,  whose  verifications  have  duplicated 
the  functions  of  the  collector,  is  followed  by  the  inspector,  who 
has  charge  of  controlling  at  once  the  two  preceding  agents.   The 
His  functions  may  be  defined  as  follows:     *'The  inspector   J^^spg^oy 
revises  by  testing  the  work  performed  by  the  collectors  and    is  Proved 
the  deputy  inspectors  and  proceeds  with  important  inquiries 
which  are  entrusted  to  him  by  the  director."    There  is  on  the 

^  The  deputy  inspectors  in  former  times  had  the  more  modest  but 
still  honorable  title  of  examiners. 

2  "At  the  time  when  I  entered  the  service,"  said  the  director  gen- 
eral, "the  agents  did  not  proceed  at  all  with  the  verifications  except 
in  public  depositories  and  in  offices  of  ministerial  officers;  but  since 
then  the  investigation  of  the  agents  of  this  administration  covers  all 
financial  companies,  all  insurance  companies,  religious  congregations, 
express  companies,  and  a  vast  number  of  public  depositories."  (Cham- 
ber of  Deputies,  February  i8,  1888.) 

3  At  times,  it  is  said,  the  collector,,  in  order  to  get  on  the  right  side 
of  the  superior  officer,  betrays  to  him  certain  decouvertes  against 
himself,  which  are  not  too  harmful,  and  which  he  has  carefully  con- 
cealed. 

*  The  portion  of  the  operations  verified  by  the  deputy  inspector  is 
called  a  regie. 

AZ7 


THE  BUDGET 


The  De- 
partmental 
Director 
Commands 
the  Inspec- 
tor and  the 
Deputy 


average  one  inspector  per  departement,^  with  the  exception 
of  large  centers,  in  which  they  are  more  numerous.  Each  in- 
spector, during  the  210  days  spent  regularly  outside  of  his 
place  of  residence,  and  during  the  155  days  devoted  to  the 
locality  of  residence,  visits  almost  40  offices.  He  can,  there- 
fore, proceed  only  by  making  tests  and  by  making  his  verifica- 
tions shrewdly  in  such  part  of  the  service  as  gives  ground  for 
suspicion.  The  director  general  of  the  administration  was 
able  to  state  that  even  after  the  investigations  of  the  collectors 
and  of  the  deputy  inspectors,  this  third  revision  was  yielding 
considerable  results.  "Each  inspector,"  he  said,  "costs  the 
Treasury  6,500  francs  on  the  average  in  salary,  and  recovers 
for  the  Treasury  between  11,000  and  12,000  francs  per  an- 
num." (Chamber  of  Deputies,  Session  of  February  18,  1888.) 
The  praise  of  the  inspectors  was  repeated  before  the  Chambers 
on  the  occasion  of  the  increase  of  their  salaries  in  191 2.  (Ses- 
sion of  November  14,  191 1.) 

The  director  of  records — who  is  the  chief  of  this  service 
for  the  departmental  district — can  judge,  from  the  statements 
and  memoranda  submitted  to  him  by  the  collectors,  the  amount 
of  zeal  they  display  in  the  collection  of  the  tax.  By  corre- 
spondence he  transmits  his  observations  and  calls  for  explana- 
tions. In  case  of  necessity,  he  inspects  the  bureaus  of  some 
of  them. 

From  the  departmental  director's  office  emanate  the  orders 
for  tours  to  be  made  by  the  inspectors  and  deputy  inspectors ; 
to  this  office  are  then  submitted  the  reports  of  the  superior 
officers  only,  to  be  communicated  to  the  central  administra- 
tion there  to  be  acted  upon.  Usually  the  directors  of  the  regis- 
tration, like  their  colleagues  in  other  branches  of  the  fiscal 
administration,  correspond  independently  with  the  various 
authorities  and  with  the  central  administration.  As  there  is 
no  superior  accounting  officer  for  the  excise  administration 
in  the  departenient,  the  director  of  registration  absorbs  the 

^  The  commission  on  budget  for  1888  suggested  the  reduction  of 
the  number  of  inspectors  to  seventy-two.  According  to  this  commis- 
sion, one  inspector  could  easily  attend  to  the  service  of  several 
departements  in  those  sections  of  the  country  where  the  service  is  of 
little  importance  and  where  the  communications  are  easy.  Besides, 
certain  inspectors  in  large  cities,  particularly  in  Paris,  were  deemed 
by  the  commission  as  superfluous.  The  Chamber  had  at  first  accepted 
the  suggestion  of  its  commission,  but  upon  the  advice  of  the  Senate 
the  total  appropriation  necessary  for  providing  for  the  one  hundred 
and  two  inspectors  was  reestablished  in  the  budget  for  1888. 

438 


THE  COLLECTION  OF  REVENUES 

accounting  functions  of  his  collectors  and  sums  them  up  in  a 
general  memorandum  (Bordereau  general)  intended  for  the 
Coiir  des  Comptes. 


Distinctively  Characteristic  Features  of  the  Services 
FOR  THE  Collection  of  Indirect  and  Direct  Taxes 

The  service  for  the  collection  of  direct  taxes,  as  may  be 
remembered,  has  no  inspectors  among  its  personnel.^  Safe- 
guards of  another  sort  are  in  existence  in  connection  with  this 
service,  particularly  that  of  making  officers  responsible  for 
the  full  amount  of  the  rolls  entrusted  to  them — they  being  Paying 
compelled  as  a  matter  of  duty  to  make  up  the  uncollected  personally 

sums  with  their  own  funds.  Responsible 

As  far  as  indirect  taxes  are  concerned,  the  personal  respon- 
sibility of  the  accountable  officers,  which  is  clearly  set  forth 
in  the  accounting  code,  becomes  effective  only  when  made  an 
expressed  condition.  The  decree  of  May  31,  1862,  declares: 
"The  accountable  officers  can  obtain  a  release  from  responsi- 
bility by  proving  that  they  have  taken  all  necessary  measures 
and  in  proper  time  have  taken  all  the  required  legal  actions 
and  steps  against  the  debtors  and  the  retailers."  Article  325 
adds : 

"With  regard  to  collectors  of  public  funds — other  than 
treasurers  general,  special  collectors  and  collectors — there 
shall  l)e  drawn  up,  before  the  expiration  of  each  fiscal 
period,  schedules  presenting  the  duties  and  proceeds  still 
to  be  collected,  distinguishing  between  the  debts  which 
must  be.  charged  against  the  taxpayers,  and  those  which 
have  to  be  levied  against  the  following  fiscal  period,  and 
those  from  which  the  collectors  may  have  to  obtain  a 
release."- 

^  The  special  collectors  of  finances  verify  the  service  of  their  sub- 
ordinates, either  on  the  basis  of  accounting  papers  transmitted  to 
them  periodically  or  on  the  spot.  Ministerial  circular  note  of  De- 
cember 20,  1895,  recommends  that  the  treasurers  general  and  special 
collectors  verify  personally  the  work  of  every  collector  at  least  once 
a  year  and  proceed  with  a  very  careful  examination  of  periodical 
documents  submitted  by  the  accountants.  "Your  financial  responsi- 
bility," this  circular  note  adds,  "constitutes  already  the  first  and  at  the 
same  time  an  efficacious  sanction  of  the  obligations  of  which  I  have 
just  reminded  you." 

^  The  collectors  of  indirect  taxes,  who  balance  without  exception 
during  the  closing  three  months  of  the  fiscal  period  the  whole  of  the 

439 


THE  BUDGET 


Dissimi- 
larity 
Between 
Direct  and 
Indirect 
Taxes 


Excepting  in  cases  of  gross  fault  or  malfeasance,  the  admin- 
istration can  always  release  the  accountable  ofificer,  either  by 
ordering  a  complete  release  (decha/rge)  or  by  declaring  an 
indefinite  extension  (reprise  indefinie),  that  is,  a  postpone- 
ment of  the  auditing.  The  responsibility  is  not  so. strictly  en- 
forced as  in  the  case  of  the  direct  tax.  Other  guarantees  of 
a  different  character  are  substituted  for  this  responsibility; 
these  guarantees  are  composed  of  a  series  of  controls  and 
inspections  which  were  described  above. 

The  dissimilarity  between  direct  and  indirect  taxes  results, 
first,  to  a  large  degree  from  the  dissimilarity  of  the  taxable 
matters :  on  the  one  hand,  we  have  permanent  objects,  visible 
and  exposed  to  taxation  by  the  fiscal  administration;  on  the 
other,  we  have  transient,  mobile,  replaceable  objects,  which 
have  to  be  attacked  quickly,  or  otherwise  the  fiscal  administra- 
tion runs  the  risk  of  not  seeing  them  again. 

Furthermore,  the  organization  of  their  respective  adminis- 
trations has  always  been  different.  Under  the  old  regime — 
while  the  collection  of  indirect  taxes  (aides) ,  salt  tax  (ga- 
belle),  duty  on  imports  (traites)  was  turned  over  to  con- 
tractors who  exploited  the  service  with  a  view  only  to  show- 
ing profits  for  their  company — direct  taxes,  the  villain  tax 
(taille),  capitation  tax  and  land  tax  (vingtiemes) ,  were  un- 
der the  direct  control  of  the  comptroller  general  of  finances. 
Under  the  Consulat  and  under  the  Empire  the  ministry  of  the 
treasury  performed  the  function  of  collecting  direct  taxes  sep- 
arately from  the  indirect  taxes,  which  were  administered  by 
the  ministry  of  finance. 

Nowadays,  the  indirect  taxes  rest  with  the  fiscal  administra- 
tions, organized  according  to  a  uniform  model,  animated  with 
the  same  spirit,  each  with  a  director  general  and  an  adminis- 
trative council;  on  the  other  hand,  however,  we  have  agents 
collecting  the  direct  taxes,^  treasurers  general,  special  fiscal 
agents  and  collectors,  who  are  recruited  and  promoted  in  a 
special  way  and  who  are  subordinated  directly  to  the  Minister 
of  Finance. 


droits  constates  for  the  year,  receive  a  premium  (prime  d*apurement). 
In  order  to  get  this  premium,  many  accountants  prefer  to  turn  in, 
in  advance,  out  of  their  personal  funds,  the  arrears  of  taxes  due  from 
the  taxpayers,  in  case  they  are  not  too  considerable. 

^  The  service  of  direct  taxes,  however,  which  has  charge  of  prepar- 
ing and  making  out  the  rolls,  is  subordinated,  as  it  may  be  remem- 
bered, to  a  direction  generate,  which  is  analogous  to  the  preceding  one. 

440 


THE  COLLECTION  OF  REVENUES 

Therefore,  let  us  not  attempt  to  discuss  the  comparative  Direct  and 
merits  of  the  procedures  for  the  collection  of  direct  and  indi-   Taxe^' 
rect  taxes,   because,   on  account   of  the  essentially  different   Contrasted 
features  of  each  of  these  two  kinds  of  taxes,  the  procedures 
could  not  possibly  be  similar.    Let  us  ascertain,  if  possible,  to 
what  extent  each  accomplishes  its  purpose  in  France.     We 
have  already  admired  the  promptness  with  which  the  direct 
taxes  come  in;  we  shall  be  surprised  in  no  lesser  degree  by 
the  way  the  indirect  taxes  are  collected. 

If,  in  fact,  we  consult  the  final  accounts  of  revenues 
(comptes  definitifs  des  recettes),  we  shall  see  that  the  indirect 
taxes  are  balanced  at  the  end  of  the  fiscal  period  by  9,731,000 
francs,  which  is  a  small  sum  compared  with  the  ascertained 
total  of  about  650,000,000.  An  examination  of  the  details  of 
this  shortage  still  further  reduces  its  importance,  because  a 
large  part  of  it  results  from  the  fact  that  municipalities  post- 
pone the  payment  of  certain  dues  resulting  from  excise  tolls 
(droits  d' entree)  ;  retailers  postpone  the  payment  of  fines;  rail- 
road companies  delay  settling  the  last  three  months'  period,  etc. 
With  regard  to  customs  duties,  there  are,  against  more  than 
500,000,000  francs  of  collections,  perhaps  only  1,300,000 
francs  delinquent.  This  1,300,000  francs  is  due  entirely  to 
fines  and  other  transactions.  As  for  registration,  there  is 
an  arrearage  of  712,470  francs  against  700,000,000  of  ascer- 
tained taxes  (droits  constates).  There  is  a  shortage  of  500 
francs  in  connection  with  the  stamp  tax.  Almost  no  delin- 
quency occurs  on  account  of  the  four  per  cent.  tax.  In  brief, 
against  2,500,000,000  of  indirect  taxes,  subject  to  collection, 
the  closing  of  the  fiscal  period  shows  a  deficit  of  only  a  few 
millions,  the  greater  part  of  which  can  l^e  explained  and  ex- 
cused. Few  countries  can  present  so  small  an  uncollected 
balance  in  the  execution  of  the  budget  of  revenues. 


General  Inspection  of  Finances  • 

While  on  the  subject  of  the  control  of  revenues,  let  us  speak 
further  of  the  general  inspection  of  finances,  although  its 
functions  include  expenditures  as  well  as  revenues. 

The  general  inspection  of  finances — growing  out  of  the 
general  inspection  of  the  Treasury,  which  was  organized  in 
the  year  IX  of  the  Republic,  at  the  beginning  of  the  Consulate 
— owes  Its  origin  to  the  Restoration.    The  latter,  eager  to  re- 

441 


THE  BUDGET 

-  organize  the  administration  of  finances,  as  we  have  seen,  well 

understand  the  benefits  which  would  accrue  from  entrusting — 

Duties  "to  a  body  of  inspectors,  composed  of  able  men,  the  duty 

Inspectors  ^^  auditing  the  public  treasuries,  of  supervising  the  ac- 

countable officers  in  their  various  activities,  of  accelerat- 
ing the  collection  of  the  revenues,  of  observing  the  possi- 
bilities for  increasing  the  revenues,  of  pointing  out  de- 
fects and  abuses,  of  suggesting  appropriate  measures  for 
removing  such  defects  and  abuses,  and  finally  of  render- 
ing, wherever  there  was  need,  the  support  of  its  services 
and  the  aid  of  its  own  experience."  (Account  of  the 
Royal  Treasury  for  1816,  report  of  the  Minister.) 

Each  fiscal  administration  in  former  times  had  its  own  body 
of  inspectors  general.^  On  the  basis  of  the  report  of  Novem- 
ber 29,  18 1 5 — which  was  submitted  by  the  director  of  the 
general  accounting  division  (comptabilite  generale)  to  the 
Minister — the  inspectors  of  finances  were  given  charge  of  the 
audit  of  the  treasuries  {caisses)  and  of  examining  the  account- 
ing work  of  the  agents  of  fiscal  administrations.  This  was 
done  for  the  purpose  only  of  extending  the  functions  of  the 
inspection  of  finances,  in  order  to  justify  the  maintenance  of 
the  existing  number  of  inspectors,  in  spite  of  the  losses  of 
territory  suffered  by  France.  On  April  3,  1820,  however,  the 
minister  gave  the  order  to  the  agents  of  fiscal  administrations 
of  all  grades  to  supply  the  inspectors  and  deputy  inspectors 
of  finances  with  all  the  information  which  they  might  need 
on  the  situation  of  the  various  branches  of  the  service;  not- 
withstanding the  fact  that  special  inspectors  of  fiscal  adminis- 
trations were  still  in  office,  conflicts  resulted — -at  least  in  dupli- 
cation of  work.  Only  between  1821  and  1824  was  it  decided 
to  abolish  in  each  fiscal  administration  the  body  of  special  in- 
spectors; this  gave  to  the  general  inspection  of  finances  the 
/  exclusive  charge  of  verifying  henceforth  the  work  of  the 
(  agents  of  all  branches  of  the  service  of  the  ministry  of  finance. 
^This    unification    coincided    with    the    unification    which    de 

^  Notice  sur  Vinspection  des  finances,  attached  to  the  book  under 
the  title :  De  V organisation  des  administrations  financicres  et  de  leur 
existence  politique,  by  Pagart,  Deputy  Chief  of  the  Administration  of 
Registration,  Paris,  May,  1848.  The  author  would  like  to  see  the  old- 
time  special  inspectors  of  excise  (inspecteurs  speciaux  des  regies) 
reestablished. 

442 


Inspectors 


THE  COLLECTION  OF  REVENUES 

Villele  introduced  in  the  bureaus  of  materials,  pensions,  the 
accounting  system,  and  in  the  installation  of  the  fiscal  admin- 
istrations, as  explained  in  Chapter  III. 

In  1830,  the  general  report  on  the  finances  submitted  to  the 
King  by  M.  de  Chabrol,  read  in  part,  extending  congratula- 
tions on  having  secured — 

"the  cooperation  of  a  body  of  inspectors  formed  of  well-  Supremacy 
instructed  men,  commissioned  to  exercise  in  the  interior  ^^  *^^ 
of  the  country  a  continuous  supervision  over  the  numerous 
agents  and  over  the  various  parts  of  the  service  of 
finances,  to  inform  the  Minister  by  prompt  and  direct  re- 
ports, to  render  everywhere  the  assistance  which  their 
experience  warranted,  and  to  facilitate  the  control  of 
every  branch  of  the  superior  administrations  by  making 
local  verifications.'* 

These  quotations  show  to  what  extent  the  merits  of  a  gen- 
eral inspection  of  finances  were  appreciated  and  permit  the 
definition  of  the  nature  of  these  services,  which  may  be 
summed  up  as  follows:  general  supervision  on  the  spot  over 
all  agents  subordinated  to  the  ministry  of  finance,  and  over 
accountable  officers  subordinate  to  other  ministries;  special 
missions  of  control  over  establishments  which  have  anything 
to  do  with  the  finances  of  the  State,  or  which  are  bound  to  the 
State  by  contracts.^ 

In  order  to  perform  the  functions  of  verifiers  of  the  work   France 
performed  by  agents  of  the  ministry  of  finance  and  by  the  J^^g^Teli 
various  accountable  officers,  the  inspectors  of  finances  make   Districts 
an  annual  tour  of  six  and  a  half  months,  from  May  to  Novem- 
ber 15,  all  over  continental  France,  which  is  divided  for  this 
purpose   into  ten  districts.^     Each  district  is  covered  by  a 
division  of  inspectors  under  the  direction  of  an  inspector  gen- 
eral.^   The  inspector  general,  who,  for  three  successive  years 

^  The  inspection  of  finances  has  charge  of  verifying  the  services 
of  post  and  telegraph,  of  hospital  establishments,  of  institutions  of 
superior  instruction,  of  savings  banks,  stud  farms,  of  various  agri- 
cultural establishments,  etc.  It  also  verifies  the  accounts  of  large 
railroad  companies  and  other  companies,  establishments,  syndicates, 
and  corporations  which  are  bound  to  the  State  by  treaties,  contracts, 
conventions  or  guarantees  of  interest,  etc. 

2  Algiers  forms  a  special  tour,  which  involves  a  prolonged  sojourn. 

^  See  ordinance  of  March  28,  1842,  issued  upon  the  suggestion  of 
Minister  Humann. 

443 


THE  BUDGET 

has  charge  of  the  same  route,  must,  during  this  period,  ex- 
amine as  far  as  possible  all  branches  of  the  service  under  him. 
In  each  case,  a  certain  number  of  agents,  selected  by  test, 
must  undergo  examination  by  the  inspectors;  the  control  af- 
fects in  a  positive  way  only  the  departmental  or  district  chiefs, 
who  recapitulate  in  their  reports  the  work  of  their  subordi- 
nates, for  whom  they  are  responsible.  When  each  examina- 
tion is  finished,  the  inspector  incorporates  his  observations  in 
a  special  report,  which  is  communicated  to  the  agent  to  whom 
it  refers;  the  latter  replies  to  the  criticisms,  a  column  having 
been  reserved  for  that  purpose.  The  chief  of  the  service  gives 
.  his  opinion  in  another  column.  The  investigation,  therefore, 
has  the  characteristic  result  of  always  being  contradictory. 
Finally,  the  inspector  general  annotates  in  the  last  column  the 
observations  of  his  collaborators,  the  replies  of  the  agent 
whose  work  was  verified  and  the  entries  made  by  the  chief  of 
the  service.  The  summary  of  reports  relating  to  each  dc- 
partement  or  district  is  in  turn  submitted  to  the  Minister,  ac- 
companied by  a  general  report,  outlining  the  principal  facts 
which  have  been  ascertained,  with  suggestions  of  reform  and 
improvement. 
The  ^     The  division  of  inspection  is  composed  of  inspectors  gen- 

Hferarchv  ^^^^'  inspectors  divided  into  four  grades,  and  assistants,  in 
total,  ninety-seven  agents;  this  personnel  is  small  and  a  por- 
tion of  it  is  kept  busy  by  annual  tours  made  for  the  purpose 
of  checking  up  the  railroad  companies  and  other  corporations 
and  establishments;  but  it  is  still  sufficient  to  maintain  the 
superior  control  over  the  financial  organization  of  the  coun- 
try. Its  eflFectiveness  does  not  lie  in  the  number  of  its  mem- 
bers; it  results  from  the  spirit  of  rectitude,  devotion  to  work 
and  independence  of  judgment.  Due  to  the  fact  that  this  is  a 
picked  body  of  officers,  the  rule  coming  from  the  capital  is 
uniformly  enforced  all  over  the  country,  without  red  tape  and 
without  deviation. 


444 


CHAPTER  XXII 

THE  CONCENTRATION  OF  REVENUES  IN  THE 
TREASURY 

The  Collection  of  Funds:  Details  of  Making  Collections;  The  Three 

Functions  of  the  Special  Collectors. 
Concentration  of  Funds  by  the  Treasurers  General:  The  Treasurers 

General  Carry  Accounts;  The  Old  Plan  of  Reciprocal  Interest;  It 

Was  Abandoned  in  1887. 
Uses  of  the  Funds  of  the  Treasury:  Order  in  Which  Accounts  Are 

Paid ;  Three  Methods  of  Paying ;  The  Role  of  the  Bank  of  France : 

Its  Relation  to  the  State;  The  Bank  Transfers  Funds. 

The  revenues  which  flow  into  the  treasuries  of  the  various 
collectors  of  direct  and  indirect  taxes  do  not  remain  there  for 
any  length  of  time.  By  a  wise  precaution,  the  administration 
recommends  that  the  accountable  officers  turn  over  their  col- 
lections within  the  shortest  possible  time.  Every  eight  or  ten 
days — even  at  shorter  intervals  in  cities,  and,  at  least  once  a 
month  in  rural  districts — collectors  turn  over  the  funds  paid 
in  by  the  taxpayers  to  the  special  collectors,^  the  agents  of  the 
administrative  division  of  which  the  treasurer  general  is  the 
departmental  chief. 

Collection  of  Funds 

The  collectors  turn  the  funds  over  to  the  special  collector's 
ofiice  by  reason  of  the  fact  that  it  is  in  the  direct  line  of  author- 
ity. But,  on  the  same  ground,  it  could  very  well  be  supposed 
that  the  collectors  of  indirect  taxes  and  customs  officers  would 
turn  their  funds  over  to  their  superior  accountable  officer,  the 
chief  collector.  In  order  to  avoid  a  useless  detour,  however, 
they  turn  their  funds  directly  into  the  office  of  the  special 

^  The  title  of  the  special  collector  of  finances  is  applied  in  this 
connection  in  its  generic  meaning  not  only  to  the  special  collectors 
themselves  for  the  district  of  the  sous-prefecture,  but  also  to  the 
treasurers  general  who  perform  the  functions  of  the  special  collector 
for  the  district  of  the  capital. 

445 


THE  BUDGET 

collector  of  finances;  the  receipt  issued  by  the  latter  is  the 
only  thing  they  submit  to  the  chief  collector,  together  with 
the  memoranda  and  the  accounts  substantiating  their  receipt. 
The  chief  collector  turns  over  to  the  collector  of  finances  the 
amount  of  his  own  fiscal  collections  and  the  proceeds  of  his 
sales  of  monopolized  products,  in  case  he  is  a  bonded  store- 
keeper. 

As  far  as  the  registration  is  concerned,  the  collectors  go 
direct  to  the  special  collector's  office,  because  there  is  no  inter- 
mediate officer  of  their  own  administration  in  whose  hands 
the  funds  can  be  centralized.  The  collectors  of  posts  and  tele- 
graphs, as  subordinate  agents,  also  tiirn  in  the  total  amount 
of  their  collections. 

Details  of  Making  Collections:  All  collections,  regardless 
of  their  source,  in  every  district,  enter  the  treasury  of  the 
special  collector,  who  gives  to  each  person  who  turns  in 
money  a  counterfoil  receipt.  This  receipt — in  order  to  be 
valid  and  constitute  a  claim  against  the  Treasury,  according  to 
the  law  of  April  24,  1833,^  had  to  be  signed  and  detached 
from  its  counterfoil  by  the  prefect  or  the  sub-prefect  within 
twenty-four  hours.  This  provision  was  abrogated  by  the  law 
of  December  24,  1886,  because  the  officers  of  the  prefecture 
or  of  the  sub-prefecture  were  not  always  on  hand  to  execute 
their  znses;  hence  the  control  worked  badly  and  at  times 
caused  a  deal  of  trouble  to  the  parties  trying  to  obtain  such 
signature.  The  counterfoils  are  now  kept  at  the  collector's 
office,  and  are  later  turned  over  to  the  public  accounting  bu- 
reau. The  loose-leaf  is  handed  to  the  party  making  the  pay- 
ment. 

After  the  accountable  officers  receiving  money  have  thus 
duly  turned  over  their  collections,  we  need  bother  with  them 
no  longer,  as  their  function  is  terminated.  We  must  now 
follow  the  funds  deposited  in  the  collector's  office  until  they 
reach  the  central  Treasury.  Let  us  begin  by  specifying  the 
hierarchical  position  of  the  special  collectors,  who  are  the  first 
to  receive  these  funds. 

1  The  control  organized  by  the  law  of  April  24,  1833,  already  pro- 
vided for,  however,  by  the  decree  of  January  4,  1808,  and  by  the  ordi- 
nance of  November  18,  1817,  which  fell  into  disuse,  was  caused  by 
the  "deplorable  abuse  of  confidence  discovered  in  the  beginning  of 
1832,"  avowed  the  deputy  submitting  the  law  of  1833;  this  deplorable 
abuse  of  confidence  is  known  under  the  name  of  the  Kessner  deHcit. 

446 


CJONCENTRATION  OF  REVENUES  IN  TREASURY 

In  each  district  there  is  a  special  collector  of  finances ;  ^ 
in  the  capital  of  each  dcpartement  the  treasurer  general  per- 
forms these  functions.  The  usual  functions  assigned  to  the 
special  collectors  to  be  performed  for  the  State  ^  are  these : 

1.  As  has  been  stated,  they  bring  together  in  their 
Treasury  the  revenues  turned  in  by  the  various  account- 
able officers  who  collect  direct  and  indirect  taxes,  the 
collectors  of  posts  and  telegraphs,  etc.,  within  their  dis- 
tricts.^ 

2.  They  supervise  and  direct  the  work  of  the  collec- 
tors (percepteiirs)  and  are  responsible  for  the  turning 
in  of  direct  taxes  in  their  districts — also  explained  above. 

3.  They  execute  orders  for  the  purchase  and  sale  of 
bonds  coming  from  the  public  and  serve  as  agents  for 
bearer  bondholders  in  transferring  and  reissuing  of 
bonds  to  order  or  to  bearer."* 

Aside  from  these  three  special  functions,  they  have  only  a 
subordinate  position.  The  decree  regulating  this,  issued  on 
March  31,  1862,  declared: 

"Article  333.  The  special  collectors  perform  their 
functions  under  the  supervision  and  the  direction  of  the 

^  The  Chamber  of  Deputies  having  in  1888  manifested  its  desire  to 
come  finally  to  the  complete  abolition  of  special  collector's  offices, 
twelve  disappeared  immediately  in  August  and  September  through 
extinction;  successively  about  thirty  shared  their  lot;  all  that  was 
necessary  was  to  continue  in  the  same  way.  But,  "because  of  recla- 
mations by  interested  parties,  which  were  partly  justified,"  says  a 
ministerial  report  of  March  24,  1896,  this  measure  was  repealed, 
and  a  decree  of  the  same  date  reestablished  the  institution  in  its 
entirety,  abolishing  the  collector's  offices  in  capital  cities  of  the 
departements. 

2  The  special  collector,  in  addition  to  the  functions  performed  for 
the  State,  has  the  functions  of  an  agent  of  the  Caisse  des  Depots  et 
Consignations  in  the  district;  he  also  verifies  the  accounts  of  the 
municipal  budgets,  of  hospitals,  of  syndicates;  he  supervises  the  sav- 
ings banks,  collects  the  proceeds  of  departements,  etc. 

^  The  special  collectors  occasionally  collect  the  taxes  on  inventions, 
on  the  school  money  of  the  pupils  of  military  schools  and  of  the 
naval  schools,  of  the  contributions  signed  by  the  departments,  the 
municipalities  and  by  private  individuals,  etc.;  all  these  are  directly 
turned  over  to  the  -special  collectors. 

*  It  seems  that  the  service  of  purchasing  of  bonds  suffered  most 
from  the  reform  which  was  intended  to  abolish  the  collectors  of 
finances. 

447 


THE  BUDGET  \ 

collector  general  ^  of  the  departcment  to  whom  they  re- 
port. Article  336.  The  collectors  general  dispose  of  the 
funds  collected  by  the  special  collectors  either  by  turning 
them  over  to  the  general  collector's  office,  by  using  them 
on  the  spot,  by  authorizing  the  collectors  to  keep  them 
in  their  hands  or  by  using  the  funds  in  some  entirely  dif- 
ferent way  required  by  the  needs  of  the  service."  ^ 

In  a  word,  the  special  collectors  are  but  agents  ^  of  the 
treasurer  general.  Therefore,  only  in  connection  with  the 
treasurers  general — who  are  responsible  to  the  Ministers  of 
Finance  and  to  the  Cour  des  Comptes — can  the  details  of  the 
service  of  the  special  collectors  and  of  the  concentration  of 
funds  properly  be  described. 

Centralization  of  Funds  by  the  Treasurers  General 

Article  336,  of  May  31,  1862,  just  quoted,  shows  to  what 
extent  the  treasurer  general  considers  the  collections  made  by 
his  subordinates  his  own  and  disposes  of  them  at  will.  The 
treasurer  general,  however,  does  not  use  them  for  his  own 
account.  The  funds  which  he  handles  belong  to  the  State, 
and  he  brings  together  these  funds  only  for  the  purpose  of 
transmitting  them  to  the  State.  Let  us  see,  first,  the  connec- 
tion between  the  treasurers  general  and  the  Treasury. 

The  treasurers  general  keep  a  current  account  {'compte 
courant)  ^  with  the  Treasury;  each  entry  of  revenues  and  of 

^  Collector  General  is  a  title  which  was  once  borne  by  the  treasurers 
general. 

2  The  decree  of  May  31,  1862,  adds,  furthermore,  in  its  Article  333, 
that  the  collector  general  is  accountable  for  the  work  of  the  special 
collectors  both  to  the  administration  and  to  the  Cour  des  Comptes. 

3  The  law  of  the  27th  Ventose,  of  the  year  VIII  of  the  Republic, 
which  established  a  special  collector  of  finances  in  every  arrondisse- 
ment  gave  them  the  place  of  the  oldtime  revenue  agents  (Preposes 
aux  recettes),  who  were  the  agents  of  the  collectors  general  and 
were  appointed  by  the  latter. 

*  We  speak  in  this  instance  of  the  Current  account  of  the  Treasury 
(Compte  courant  du  tresor)  with  the  treasurers  general,  which  ac- 
count is  debited  and  credited  with  all  the  public  revenues  and  expendi- 
tures which  were  collected  respectively  disbursed  by  them.  Another 
current  account  called  the  Current  account  of  the  treasurers  general 
{Compte  courant  des  tresoriers  generaux),  which  is  one  of  the  ele- 
ments of  the  floating  debt,  shows  especially  the  advances  which  the 
treasurers  general  deposit  out  of  their  personal  funds  with  the  Treas- 

448 


CONCENTRATION  OF  REVENUES  IN  TREASURY 

expenditures  is  daily  credited  or  debited  to  this  account.    This  The 
is  a  simple  but  substantial  and  positive  link  by  which  the  General" 
treasurers  general  are  bound  to  the  Treasury.     "The  treas-   Carry 
urers  general  are  connected  with  the  Treasury  by  the  link  of   Accounts 
a  current  account  in  which  they  are  debited  with  all  revenues 
and  credited  with  all  expenditures  which  they  take  in  or  dis-  .  ^.  "^ 

burse  for  the  account  of  the  Treasury  and  for  the  latter*s  ^'^''''^^^ 
correspondents."  (General  instruction  of  1859,  Article  802.)  Z-^^^^'^' J 
Owing  to  this  elementary  instrument,  the  Minister  of  Finance 
finds  himself  ipso  facto  in  possession  of  all  the  funds  col- 
lected on  French  territory;  he  enters  into  immediate  posses- 
sion of  them  because  he  can  move  at  will  the  available  bal- 
ances as  soon  as  a  memorandum  of  their  amount  is  submit- 
ted to  him. 

In  former  times,  the  current  account  was  debited  with  the 
interest  charged  to  the  treasurer  general.  The  revenues  were 
collected  and  credited  with  interest  to  his  own  account  after  The  old 
the  payment  or  the  turnover  of  funds  was  completed.  This  ^Reciprocal 
constituted  what  the  general  instructions  called  the  current  interest" 
account  at  reciprocal  interest  (interets  reciproques)  the  com- 
binations of  which  yielded  a  premium  to  the  treasurer  general 
when  he  paid  over  his  funds  to  the  Treasury ;  and  on  the  con- 
trary inflicted  a  penalty  on  him,  under  the  form  of  interest  to 
be  charged  against  him,  in  case  he  kept  the  collections  without 
investing  them.  These  alternating  stimulants  have  constantly 
kept  him  on  the  alert,  compelled  him  to  exercise  his  wits  in  ^ 
order  to  discover  the  most  lucrative  investments  for  his  avail- 
able funds,  which  investments  were  of  necessity  liquid,  in 
order  that,  when  demanded,  the  Treasury  could  be  paid. 
"Through  this  accounting  formula,  taken  from  commercial 
practice,  the  public  interest  and  the  interest  of  the  treasurer 
general  are  constantly  connected  with  each  -  other,  because 
every  slackening  of  the  work  of  the  State  would  make  both 
of  them  suffer  an  equal  damage,"  said  the  Marquis  d'Audif- 
fret,  in  his  Systime  Financier  de  la  France} 

ury.  Nothing  is  easier  than  to  become  confused  in  the  course  of  a 
discussion  of  these  two  current  accounts  which  are,  however,  very 
different  from  each  other. 

^  The  Marquis  d'Audiffret,  who  was  very  fond  of  eulogizing  a 
form  of  accounting  of  which  he  was  partly  the  author,  said  in  his 
Souvenirs  sur  le  baron  Louis:  'The  personal  interest  of  these  impor- 
tant depositors  of  public  funds  constantly  causes  them  to  supply  all 
the  funds  of  their  treasuries  for  all  possible  needs." 

449 


THE  BUDGET 

The  system  of  the  current  account,  with  reciprocal  interest 
and  with  periods  of  valuation  in  the  middle  or  at  the  end  of 
each  tenth,  has  caused  many  abuses,^  however,  and  it  was 
therefore  abolished  in  1887.  In  its  stead,  the  Minister  of 
Finance  introduced  a  new  method  of  remitting,  calculated  on 
an  agreed  basis,  according  to  a  special  rule  applied  to  each 
treasurer  general's  office.  (Order  of  December  31,  1886.) 
Then  this  intermediary  system  of  remittances  against  the 
revenues  and  expenditures  ceased  to  exist  and  by  ministerial 
order  of  December  31,  1889,  was  definitely  replaced  by  fixed 
salaries,  as  we  shall  see  later. 

Although  the  system  of  reciprocal  interest  disappeared,  the 
current  account  did  not  cease  to  exist.  It  is  the  latter  which 
puts  the  revenues  in  the  hands  of  the  treasurers  general  at  the 
disposal  of  the  Treasury  as  they  are  collected.  The  only  dif- 
ference lies  in  the  fact  that  now  this  current  account  is  kept 
only  as  to  the  principal. 

Uses  of  the  Funds  of  the  Treasury 

The  funds  which  the  current  account  puts  at  the  disposal 
of  the  Treasury  may  have  various  destinations. 

First,  before  using  them  for  any  outside  purpose,  the  treas- 
urers general  must  reserve  for  themselves  the  amounts  neces- 
sary for  the  payment  of  public  expenditures  as  soon  as  they 
fall  due  within  their  own  departements.  For  this  purpose, 
the  secondary  ordonnateurs  (drawers  of  payment  vouchers) 


^According  to  the  system  of  the  periods  of  valuation  (epoques  de 
valeurs),  interest  on  the  current  accounts  instead  of  beginning  to 
run  from  the  exact  date  of  every  operation  ran  only  from  the  middle 
or  from  the  end  of  every  tenth.  The  result  was  that  a  treasurer  gen- 
eral notified  in  time,  and  as  far  as  he  could  find  means  of  anticipating 
the  falling  due  of  expenditures  or  the  postponing  of  the  entering  of 
revenues  for  a  few  days  only,  easily  made  a  profit  of  interest  for  ten 
days. — "There  is  a  mechanism  and  a  perfectly  wonderful  one,"  said 
one  of  the  deputies  ironically,  "which  is  called  the  mechanism  of  the 
periods  of  valuation."  The  Minister  of  Finance  replied:  "This  no 
longer  exists."  The  deputy  in  turn  added:  "I  admit  that  this  pro- 
cedure has  been  most  oddly  attenuated;  but  this  procedure  was  work- 
ing not  later  than  yesterday."     (Session  of  February  16,  1888.) 

A  report  of  Senator  Pauliat,  on  the  functions  of  the  treasurers 
general  (July  11,  1889),  explains  in  detail  the  means  used  by  the 
treasurers  general  for  deriving  a  profit  through  more  or  less  abuse  of 
the  ten-year  periods  of  the  old  current  account  at  reciprocal  interest. 
(Pages  103  to  108.) 

_  450 


CONCENTRATION  OF  REVENUES  IN  TREASURY 

of  the  district  notify  them  by  periodical  statements  as  to  the 
figures  and  the  dates  when  payments  will  be  due.  The  bu- 
reau responsible  for  the  transferring  of  funds,  as  will  be 
explained  in  Chapter  XXIV,  publishes  a  notice  of  assigned 
appropriations  (azns  de  credits  delegues),  within  the  limit  of 
which  the  payments  must  be  kept.  Besides  these  local  needs, 
the  available  balance  is  used  for  one  or  the  other  of  the  fol- 
lowing two  external  uses. 

In  the  first  place,  the  treasurers  general  hasten  to  transmit 
to  their  colleagues  of  neighboring  departements  the  subsidies 
demanded  by  the  latter.     These  transfers  of  funds  from  one 
colleague  to  the  other  can  take  place  only  upon  authorization 
by  the  bureau  for  the  general  transfer  of  funds.     Further- 
more, in  the  majority  of  cases  the  surplus  of  collections  is 
directly  turned  over  to  the  Treasury,  according  to  three  dif- 
ferent procedures.     Either  the  funds  intended  for  the  central 
Treasury  in  Paris  are  actually  sent  there — an  old  and  costly   Three 
system  no  longer  practiced  except  by  collectors  in  the  neigh-  Methods  of 
borhood  of  Paris — or  the  transfer  is  effected  by  a  remittance     ^^*"^ 
to  the  central  cashier  of  specified  securities  payable  in  Paris; 
or  finally,  as  is  most  frequently  the  case,  the  payments  are 
made  to  the  branches  of  the  Bank  of  France  for  the  account 
of  the  Treasury. 

The  Role  of  the  Bank  of  France:  The  Treasury  has  a 
deposit  account  in  the  Bank  of  France  like  any  private  indi- 
vidual, according  to  the  charter  of  the  Bank,  and  no  special  its  Relation 
agreement  has  been  necessary  to  permit  the  State  to  avail 
itself  of  this  privilege.  Different  agreements,  however,  have 
regulated,  not  the  mechanism  of  the  current  account,  which 
remains  subject  to  the  provisions  of  the  civil  law,  but  the 
amount  which  the  Bank  must  turn  over  to  this  account  as  an 
advance.^  The  State — being  a  customer  of  exceptional  im- 
portance, and  above  all  the  holder  of  the  very  source  of  the 
franchise — has  obtained  from  the  Bank  on  the  occasions  of 
renewing  its  contract  special  privileges,  consisting  of  advances 
of  funds  in  the  total  of  140,000,000  francs  (laws  of  1875  and 
1878),  40,000,000  (law  of  November  17,   1897)2  and  20,- 

^1  See  on  this  subject  the  issue  of  July  15,  1889,  of  the  Annates  de 
I'ecole  des  sciences  politiques,  which  contains  an  interesting  article 
by  M.  Chardon,  at  that  time  auditor  of  the  Conseil  d'Etat,  under  the 
title  "Rapports  de  la  Banque  de  France  et  du  Tresor." 

2  The  law  of  November  17,  1897,  renewed  the  franchise  of  the  Bank 


to  the  State 


THE  BUDGET 

000,000  (law  of  December  29,  191 1) — a  grand  total  of  200,- 
000,000  without  interest.  Moreover,  payments  and  drawings 
by  accountable  officers  can  now  be  made  not  only  at  the 
branches  but  also  at  the  agencies — almost  two  hundred 
places. 

The  Treasury,  therefore,  holding  a  current  account  of  its 
own,  causes  the  making  of  credit  and  debit  entries  against  this 
account  either  in  the  central  office  of  the  Bank  of  France  or 
by  transfers  at  the  branches  and  agencies  for  all  the  payments 
or  drawings  of  funds  which  are  demanded  for  the  Treasury's 
service ;  the  treasurers  general  and  collectors  of  finance  ^  de- 
posit at  once  the  greater  portion  of  their  collections  with  the 
Bank  at  their  places  of  residence,  and,  conversely,  in  case  they 
need  funds  they  demand  them  of  the  Bank,  upon  authoriza- 
tion of  the  bureau  for  the  general  transfer  of  funds. 

Thus,  the  Bank  of  France  does  most  of  the  transferring  of 
the  Treasury's  funds.  The  Bank  receives  from  all  over'  France 
the  surplus  collections  made  by  the  accountable  officers  and 
instantly  puts  this  surplus  at  the  disposal  of  the  State,  which 
through  its  intermediary  immediately  shifts  these  funds  wher- 
ever there  is  need. 

The  Bank  "The  Bank  of  France  has,  to  the  largest  possible  de- 
Transfers  gree,  the  complete  charge  of  the  transfer  of  funds.  To 
^"  its  vaults  are  turned  over  on  a  single  current  account  of 
the  Treasury  all  the  surpluses  of  revenues  available  over 
the  entire  country.  From  the  Bank  of  France  also  are 
drawn  such  sums  as  are  necessary  for  making  up  the 
deficiency  of  the  collections  for  a  given  day  or  in  a  g^ven 
locality.  .  .  ."  (Statement  of  supporting  arguments  for 
the  plan  of  renewing  the  franchise  of  the  Bank,  January 
24,  1891.) 

of  France,  until  December  31,  1920,  by  imposing  on  the  bank  the 
following  obligations:  i.  Dues  calculated  according  to  the  discount 
rate  and  the  figure  of  productive  circulation,  but  2,000,000  at  the 
minimum;  2.  advance  of  from  140,000,000  to  180,000,000  bearing  no 
interest;  3.  gratuitous  payment  of  the  coupons  of  the  bonds  to  the 
bearer  over  the  counters  of  the  bank  which  issues  the  Treasury 
bonds;  4.  opening  of  agencies  besides  branches  for  the  shifting  of 
the  funds  of  the  Treasury;  5.  part  of  the  proceeds  of  the  discount 
over  5  per  cent  is  given  over  to  the  State. 

^  The  two  hundred  places  of  business  open  for  operations  to  the 
agents  of  the  Treasury  give  to  many  special  collectors  the  opportunity 
of  availing  themselves  of  the  cooperation  of  the  Bank  of  France;  the 
same  is  the  case  with  the  treasurers  general. 

452 


CONCENTRATION  OF  REVENUES  IN  TREASURY 

This  account  of  the  Treasury  with  the  Bank,  which  is  per- 
manently working,  shows  a  yearly  total  of  revenues  and  of 
expenditures  of  more  than  12,000,000,000  francs.^  The  daily 
credit  balances  range  from  100,000,000  francs  to  200,000,000 
or  more,  according  to  the  period.^ 

Even  if  the  Bank  of  France  is  not  as  yet  in  our  country  the 
official  cashier,  as  similar  institutions  are  in  some  other  coun- 
tries, it  still  performs  at  least  one  of  the  most  important  func- 
tions for  the  State.  This  subject  will  be  dwelt  upon  in  the  next 
chapter. 

^  These  operations,  in  1891,  reached  the  figure  of  9,634,000,000 
francs;  in  1894,  7,333,000,000;  in  1896,  6,202,000,000;  in  1904,  8,940,- 
coo,ooo,  and  1907,  9,094,000,000;  in  191 1,  11,700,000,000. 

2  Hereinafter  are  given  the  credit  balances  of  the  current  account 
of  the  Treasury  with  the  Bank  of  France  for  the  most  important 
years  during  the  last  century: 

September  22,  1806,      7,400,000  francs 

December    24,  1816,         300,000       " 

December    24,  18 17,       1,400,000       " 

December    24,  1828,     19,300,000      " 

December   24,  1830,      3,000,000      " 

December    24,  1847,    69,400,000      " 

December    23,  1848,    21,800,000      " 

December    24,  1852,  139,800,000      " 

December   24,  1869,  231,400,000      " 

December  24,  1870,      9,070,000      " 

December   24,  1872,  282,500,000      " 

December   26,  1890,  188,000,000      " 

December   21,  191 1,  293,600,000      " 

October       24,  1912,  315,479,000      " 


453 


CHAPTER  XXIII 
THE  TREASURY  SERVICE 

The  Treasurers  General,  Their  Duties. 

The  Institution  of  the  Treasurers  General:  It  Dates  from  the  Con- 
sulate; Outline  of  the  History  of  French  Finances:  Long-  and 
Short-Time  Bonds;  Usurious  Rates  Under  the  Directory;  The 
Negociants  Reunis;  Napoleon  Frees  the  Treasury;  The  Deposit 
of  Funds;  Duties  of  the  Collectors  General;  Organization  of 
Treasurers  General;  The  Floating  Debt;  A  Treasurer  General's 
Activities;  They  Act  in  Individual  Capacities;  This  Dual  Role 
Objectionable;   Marquis  d'Audiffret  Defends  It. 

Reform  of  the  Office  of  the  Treasurers  General :  Proposal  to  Fix  Sal- 
aries; Modified  Plan  for  Salaries;  Legislative  Struggle  Over  the 
Reform;  Cash  Results  of  the  Reform;  How  the  Economies  Were 
Effected;  Proposed  Reforms;  Objections  to  Proposed  Reforms. 

The  Treasury  in  England,  in  Germany  and  in  Belgium:  Functions 
of  the  Bank  of  England;  It  Receives  Deposits,  Etc.;  The  Reichs- 
hank;  National  Bank  of  Belgium;  In  Belgium  the  State  Profits. 


The 

Treasurers 
General, 
Their 
Duties 


The  preceding  chapter  concerned  itself  with  the  treasurers 
general  from  the  point  of  view  of  concentration  of  funds.  It 
is  now  in  order  to  consider  their  functions  as  a  whole,  which 
may  be  summed  up  as  follows :  "The  treasurers  general,  in 
each  departement  direct  the  service  of  special  collectors  and  of 
collectors  for  whom  they  are  responsible ;  they  bring  together 
the  revenues,  shift  the  funds  of  the  Treasury,  and  disburse  the 
public  expenditures."  Here  are  four  distinct  functions:  i. 
Management  of  the  service  of  collecting  direct  taxes ;  2.  cen- 
tralization of  public  revenues;  3.  shifting  of  the  funds  of  the 
Treasury;  4.  disbursement  of  public  expenditures. 

The  matter  of  collecting  the  direct  taxes  has  been  described 
in  extenso  in  a  preceding  chapter.  The  concentration  of  public 
revenues  has  just  been  treated  in  Chapter  XXII.  The  shifting 
of  funds  will  be  treated  in  this  and  in  the  next  chapter.  A 
special  chapter  is  devoted  to  the  service  of  expenditures,  which 
has  been  assigned  to  the  treasurers  general  since  the  abolition 
of  paymasters  in  1865. 

The  combining  of  these  separate  functions  will  reconstitute 
the  office,  when  we  have  completed  the  historical  outline  from 

454 


THE  TREASURY  SERVICE 

the  time  the  title  of  banking-agents  characterized  these  repre- 
sentatives of  the  Treasury. 

The  Institution  of  the  Treasurers  General 

The  organization  of  the  current  accounts  of  treasurers  gen- 
eral, mentioned  before,  dates  back  to  1806,  or,  in  a  word,  to 
the  time  when  Napoleon  rid  himself  of  the  agents  of  the  service 
(faiseurs  de  service)  and  substituted  for  them  a  new  adminis- 
trative mechanism. 

With  the  organization  of  the  Consulat,  for  the  purpose  of 
reestablishing  order  in  the  finances,  as  well  as  of  obtaining  It  Dates 
necessary  funds  for  urgent  needs,  the  collectors  general  were  co^uiajg 
requested  to  sign  monthly  agreements  at  the  beginning  of  the 
fiscal  period  which  correspohded  to  one-twelfth  of  the  total 
set  out  in  the  rolls.  In  order  to  offset  anticipated  difficulties 
in  the  collection,  the  dates  on  which  these  douziemes  were  due 
were  extended  four  months.  The  collectors  general,  therefore, 
paid  in  sixteen  months  what  strictly  speaking  was  due  to  be 
paid  to  them  by  the  taxpayers  in  twelve  months;  this  gave 
them  a  margin  of  time  which  not  only  permitted  them  to  treat 
the  public  with  consideration,  but  which  above  all  gave  them 
the  chance  to  earn  large  interest  dividends.  On  the  other  hand, 
the  Treasury  had  the  advantage  of  having  in  hand  from  the 
beginning  of  the  year  the  total  amount  of  its  direct  tax — or,  in 
other  words,  the  use  of  300,000,000  francs  out  of  a  budget  of 
about  500,000,000. 

Outline  of  the  History  of  French  Finances:  With  regard  to 
indirect  taxes,  the  sight  bonds  (bons  a  vue)  served  an  analo- 
gous purpose.  The  only  difference  was  that  instead  of  being 
subscribed  for  in  advance,  the  sight  bonds  were  issued  after 
payment.  The  accountable  officers  benefited  only  by  the  de- 
lay between  the  date  of  issue  and  the  date  of  payment.^ 

The  various  securities  subject  to  discount  were  actually  dis-  Long- and 
counted,  as  soon  as  subscribed  for,  by  a  group  of  bankers  and  Bonds  ^^^ 
contractors  called  the  agents  of  the  service.  The  sight  bonds 
easily  found  buyers,  because  of  their  early  maturity.  Long- 
time obligations,  however,  were  placed  with  difficulty,  in  spite 
of  their  being  based,  first,  on  the  guarantee  of  the  collectors 
general,  who  nearly  always  made  good  their  signatures,  and 

^  The  system  of  the  sight  bonds  was  soon  changed  by  the  decree 
of  June  21,  1804,  and  disappeared  in  1806.  See  our  Histoire  des 
Finances  du  Consulat. 

455 


THE  BUDGET 


Usurious 

Rates 

Under 

the 

Directory 


The 

Neff  octants 

Reunis 


on  the  sinking  fund,  established  in  1779,  which  was  the  de- 
pository for  the  bonds  of  accountable  officers  and  had  to  pay 
on  sight  certain  specially  protested  claims. 

In  spite  of  these  guarantees,  the  security  of  which  was 
almost  unquestioned,  usurious  rates — varying  from  one  per 
cent,  ^  per  cent,  J^  per  cent  per  month,  or  12  per  cent,  9  per 
cent,  or  6  per  cent,  per  year — were  demanded  and  obtained  by 
the  oldtime  speculators  of  the  Directory.  In  order  to  emanci- 
pate himself  from  this  oppressive  regime,  the  Minister  of  Fi- 
nance entrusted,  first,  a  committee  of  the  collectors  general  to 
discount  the  securities  issued  by  its  members  and  their  col- 
leagues. This  committee,  however — although  the  depreciation 
of  its  own  securities  made  possible  its  reaping  an  easy  profit — 
failed  through  lack  of  courage  and  capital  to  avail  itself  of 
the  opportunity. 

Then  a  company,^  Negociants  Reunis,  ofifered  to  monopolize 
the  operations  of  supplying  the  Army  and  Navy,  as  well  as  to 
attend  to  the  transfer  of  funds  for  the  Treasury ;  to  this  com- 
pany, also,  Minister  Barbe-Marbois  entrusted  the  mission 
of  supplying  the  [cash  needed  to  meet  the  requirements  of 
the]  budget,  by  discounting  the  obligations  of  the  collectors 
general,  the  sight  bonds,  the  customs  duties,  the  proceeds  from 
cutting  the  forests  and  other  securities.  As  against  these  ad- 
vances made  by  the  company  the  treasuries  turned  over  to  it 
funds  in  the  sum  advanced  and  soon  even  exceeded  that  total, 
for  coincident  with  its  main  enterprise  various  speculations 
failed  of  returns,  and  the  most  important  of  these,  that  of  the 
Mexican  piasters,^  failed  sadly.     Being  short  of  money,  the 


^  The  company  of  the  Negociants  reunis  was  composed  of  Desprez 
who  had  special  charge  of  discounting  the  securities  of  the  Treasury, 
Vanlerberghe  who  had  charge  of  supplying  food-stuffs,  and  finally 
of  Ouvrard  whose  adventurous  career  remained  famous.  Ouvrard 
reserved  for  himself  the  large  speculations.  It  was  he  who,  through 
his  boldness,  compromised  the  interests  of  the  company  and  caused 
its  failure.  The  first  agreement  made  with  Barbe-Marbois,  Minister 
of  the  Treasury,  with  regard  to  negotiating  the  securities  of  the 
Treasury  and  signed  by  Ouvrard  in  the  name  of  his  colleagues  bears 
the  date  of  April  1804. 

2  These  so-called  piaster  transactions  were  based  on  the  following 
combinations:  as  a  result  of  the  naval  wars  and  of  the  domination  of 
England  over  all  the  seas,  the  money  which  Spain  ordinarily  collected 
from  its  possessions  in  Mexico  and  in  Peru  no  longer  reached  Europe. 
The  scarcity  of  cash  which  resulted  from  this  caused  great  damage 
to  the  commerce  of  all  the  nations.  Ouvrard  obtained  from  the 
Spanish  Government  a  contract,  by  virtue  of  which  it  sold  to  Ouvrard 


THE  TREASURY  SERVICE 

company  discounted  at  the  Bank  of  France  the  obligations  of 
the  collectors  general,  which  it  held,  still  continuing,  however, 
to  appropriate  the  money  collected  by  it  from  accountable  offi- 
cers. Finally,  on  the  maturing  of  the  obligation,  the  Bank  found 
its  collateral  to  be  worthless.  This  large  institution  [the  Bank 
of  France]  avoided  bankruptcy  only  by  means  of  petty  expedi- 
ents, such  for  example  as  counting  one  by  one  the  pieces  of 
money  paid  out,  by  paying  only  one  bill  from  each  individual, 
by  distributing  previously  in  the  town  halls  the  serial  numbers, 
etc. ;  thus  only  from  500,000  to  600,000  francs  were  permitted 
to  be  withdrawn  from  the  Bank  per  day.     (October,  1805.)  ^ 

Napoleon,  who  returned  to  Paris  after  the  victory  at  Aus-  Napoleon 
terlitz,2  to  put  an  end  to  these  disorders,  compelled  the  agents  xreaUry 

the  piasters  retained  in  Mexico  at  3.75  francs,  while  the  piasters  were 
worth  5  francs  each  in  Europe.  In  order  to  bring  them  to  Europe, 
Ouvrard  hoped  to  elude  the  vigilance  of  English  cruisers  or  even 
to  obtain  a  permit  for  transit  from  Pitt  on  account  of  the  benefit 
which  the  English  commerce  would  derive  from  such  an  importa- 
tion of  ready  cash.  He  made  an  agreement  on  the  subject  with 
some  Dutch  business  houses  and  his  ingenious  plan  almost  suc- 
ceeded. However,  the  troubles  in  Europe  and  the  difficulty  of  the 
negotiations  delayed  the  carrying  out  of  the  plan,  and  before  the 
piasters  could  be  brought  from  Mexico,  the  need  of  money  had 
brought  all  these  combinations  to  naught.  His  genius  succeeded  only 
in  filling  the  Spanish  Treasury  by  means  of  advances  resulting  from 
the  funds  which  were  on  hand  at  the  offices  of  French  accountable 
officers.  Napoleon  said  later :  "I  see  what  the  whole  matter  is  about : 
Spain  owed  me  a  subsidy  and  it  was  I  who  furnished  her  with  one." 

^  In  his  general  account  of  the  Public  Treasury  submitted  on  April 
15,  1806,  Mollien  cites  in  the  following  words  the  events  relating  to 
the  failure  of  the  Agents  of  the  Service  (faiseurs  de  service)  :  "I 
have  to  perform  a  painful  duty.  Sire,  by  revealing  the  maneuvers  by 
which  some  adventurers  who,  combining  the  title  of  bankers  with  the 
Treasury  and  the  title  of  contractors,  have  abused  for  more  than  a 
year  the  confidence  which  was  placed  in  them.  ...  It  was  not  for 
the  purpose  of  helping  the  Treasury  of  France  that  these  agents 
of  the  service  flooded  the  country  with  securities;  on  the  contrary,  they 
used  these  papers  which  they  had  in  hand  through  the  confidence  the 
Treasury  placed  in  them  for  speculations  and  for  services  which  were 
entirely  foreign  to  the  Treasury  of  France  .  .  .  ;  they  have  finally 
reached  the  top  of  their  shortcomings  by  a  debt  of  more  than  100,- 
000,000  to  the  Treasury;  they  covered  this  debt  by  substituting  for 
the  proceeds  of  taxes  which  were  at  their  disposal  foreign  securities 
which  can  only  be  disposed  of  with  much  difficulty.  .  .  .  The  trace 
of  this  moment  of  disorder,  however,  seems  to  be  already  expunged. 
Sire."  (General  account  of  the  Public  Treasury  for  the  year  XIII, 
April  15,  1806.) 

2  Napoleon  said  in  November  1805 :  "Before  fifteen  days  have 
elapsed,  I  shall  beat  the  Russians,  the  Austrians  and  the  bears." 

—       457 


THE  BUDGET 

of  the  service  to  turn  over  all  their  cash  to  the  State  and  dis- 
missed Minister  Barbe-Marbois,  assigning  him  to  the  Cour  des 
Comptes.  (January  9,  1806.)  Mollien  ^  became  his  succes- 
sor. As  soon  as  the  deficit  of  the  Negociants  Reiinis  was  set- 
tled— amounting  to  141,000,000  francs  (which  was  later  much 
reduced) — the  new  Minister,  together  with  the  Emperor,  im- 
mediately devised  a  way  definitely  to  rid  themselves  of  the 
interference  of  the  bankers.  Out  of  this  idea  the  new  organi- 
zation of  the  Treasury  was  developed,  which  Napoleon  char- 
acterized as  follows,  at  the  time  Mollien  submitted  the  decree 
of  July,  1806 :  *'I  could  not  sign  too  soon  the  liberation  of  the 
Treasury."  As  a  matter  of  fact,  the  decree  of  July  16,  1806, 
carried  with  it  the  liberation  of  the  Treasury ;  by  emancipating 
it  from  outside  intrusions  the  decree  deemed  it  best  to  or- 
ganize in  the  midst  of  the  administration  of  finances  an  insti- 
tution of  banking  officials  (fonctionnaires-banqniers). 

By  virtue  of  the  decree  of  July  16,  1806:  (i)  A  service 
fund  was  established  within  the  Treasury  the  object  of  which 
was  to  provide  the  means  for  meeting  the  expenditures  of  the 
departements  with  the  greatest  possible  dispatch;  (2)  this 
service  fund  was  established  for  the  purpose  of  "opening  cur- 
rent accounts  with  all  the  collectors  general"  (Article  4). 
The  ,        Henceforth,  the  collectors  general  ceased  to  invest  on  their 

^/p^^^d  ^^"  initiative  the  surpluses  of  revenues;  the  only  thing  per- 
mitted— and  in  this  they  were  encouraged — was  the  deposit- 
ing of  the  funds  with  the  Treasury  on  current  account.  All 
incoming  monies  flowed  immediately  into  the  Central  Treas- 
ury. ''The  Treasury,"  said  Mollien,  "has  promised  the  col- 
lectors general  interest  on  the  amount  which  they  shall  pay 
in  advance,  for  the  period  determined  by  their  engagements." 
Mollien  further  added:  "But  they  have  to  turn  in  their  col- 
lections each  day."  ^  In  his  memoirs,  he  praised  the  economy 
,   of  this  reform : 

"The  purpose  of  this  reform  was  not  to  leave  funds 
idle  in  any  of  the  treasuries,  but  to  prevent  the  removal 
of  cash,  and  in  a  word,  to  introduce  into  public  affairs 

^  The  Memoires  d'un  ministre  du  Tresor  contained  the  detailed  ac- 
count of  the  scenes  which  preceded  in  the  Tuileries,  in  January  1806, 
the  retirement  of  Barbe-Marbois  and  the  appointment  of  Mollien. 

2  The  accountable  officers  were  also  authorized  to  turn  over  their 
funds  to  the  service  fund  in  bills  of  exchange  on  Paris  or  any  other 
locality  where  the  payment  of  expenditures  necessitated  the  sending 
of  subsidies. 

458 


THE  TREASURY  SERVICE 

the  system  of  compensation  by  which  business  life  regu- 
lates its  transmissions  of  money  over  the  longest  dis- 
•tances."     (Memoires  d'un  ministre  dti  Tresor.) 

In  another  place  he  says : 

'The  service  fund  completes  the  relations  of  the  Treas- 
ury with  all  the  accountable  officers ;  this  fund  brings  into 
the  public  Treasury  the  proceeds  of  direct  taxes  even  be- 
fore the  date  fixed  by  the  subscriptions  and  the  engage- 
ments of  the  collectors  general.  .  .  .  Thus  this  fund  in- 
duces accountable  officers  in  their  own  interest  to  accel- 
erate their  payments  to  the  Treasury."  (General  account 
of  the  Public  Treasury  during  the  year  XIV  [i«8o6], 
August  30,  1807.)  ^ 

Recapitulating :  The  administrative  conception  of  a  collec- 
tor general  has  assumed  that  of  a  sort  of  banking  official 
{fonctionnairc-hanqiaer)  who  has  charge,  at  his  own  risk,  of 
collecting  the  taxes  and  concentrating  the  funds  in  his  departe- 
mcnt.  The  service  continued  to  be  farmed  out  to  him,  so  to 
speak,  within  the  limits  of  his  district.  He  was  compelled  to 
deposit  his  funds  without  exception  in  the  Treasury,  through 
the  intermediary  of  the  service-fund,  which  paid  interest  as 
a  remuneration  to  the  collector  general.^ 

This  is  the  origin  of  the  service  of  the  collectors  general.  If 
we  have  emphasized  the  historical  details,  it  is  because  of  the 
fact  that  the  character  of  the  institution,  established  in  1806, 
has  continued  to  the  present  time  with  the  exception  of  the 
following  changes : 

The  orders  of  Baron  Louis,  dated  November  7  and  Decem- 

^  The  Memoires  d'un  ministre  du  Tresor  quote,  as  is  only  natural,  a 
large  number  of  citations  from  official  reports,  which  were  placed 
at  the  head  of  annual  general  accounts  submitted  by  Mollien. 

2  At  the  time  he  emancipated  the  Treasury  from  the  interference 
of  the  bankers,  Mollien  introduced  in  the  records  of  the  agents  of 
his  ministry  a  system  of  accounting  which  is  partly  double,  taken  ' 
from  commercial  life.  The  report  which  precedes  the  general 
account  of  the  Treasury  for  the  year  XIV  contains,  on  the  subject 
of  this  innovation,  very  interesting  and  remarkably  well  expressed 
details.  The  phrases  of  this  report  have  been  often  reproduced  with- 
out any  indication  of  the  origin.  This  reproduction  was  done  in  docu- 
ments which  have  since  attempted  to  explain  the  mechanism  of  the 
partly  double  accounting  system,  particularly  in  Article  1440  of  the 
general  instruction  of  June  20,  1859.    See  its  text  in  Chapter  XXVIL 


THE  BUDGET 


Duties 
of  the 
Collectors 
General 


Organiza- 
tion of 
Treasurers 
General 


ber  9,  1814,*  provided  for  the  abolition  of  the  underwriting 
of  direct  taxes,^  beginning  with  January  i,  181 5.  "From  this 
time  on,  the  current  account  had  as  a  basis  only  the  material 
facts  of  revenues  and  expenditures  at  the  moment  of  their  exe- 
cution/' ^  Then,  only  the  current  account  of  the  treasurers 
general  came  into  existence ;  it  is  a  system  of  advances  by  vir- 
tue of  which  the  treasurers  general  were  authorized  to  drain 
the  special  savings  of  their  departements  in  order  to  pay 
them  into  the  Treasury. 

Let  us  note  the  ordinances  of  December  8,  1832.  These  re- 
drafted the  old  regulations  on  the  responsibility  of  the  account- 
able officers.  Let  us,  furthermore,  take  notice  of  the  law  of 
April  24,  1833,  already  quoted,  with  regard  to  the  control  of 
the  counterfoil  receipts;  and  finally,  the  combination  accom- 
plished by  Achille  Fould,  in  1865,  of  the  functions  of  the  col- 
lectors general  with  the  functions  of  the  paymaster  in  the 
hands  of  the  paying  treasurers  general,  in  conformity  with  the 
following  text : 

"Article  i .  The  functions  of  the  collector  general  and 
of  the  paymaster  in  each  departement  shall  be  combined 
and  entrusted  to  an  official  who  shall  have  the  title  of 
paying  treasurer  general.  Article  2.  These  treasurers 
general  shall  succeed  the  collectors  general  and  the  pay- 
masters in  all  their  rights  and  obligations."  (Decree  of 
November  21,  1865.) 

The  old-time  functions  of  the  collectors  general  and  of  the 
paymasters  were  thus  concentrated  in  the  hands  of  the  new 
officers,  with  no  change ;  and  the  Marquis  d' AudiflFret,  if  living, 
could  see  with  a  certain  amount  of  pride — which,  by  the  way 
he  did  not  try  to  conceal — that  his  work  had  lasted  for  almost 
a  century. 

However,  it  has  caused  sharp  criticism: 

"The  present  organization  of  the  treasurers  general  is 
an  anachronism,  because  the  State  now  enjoys  a  credit 

^  Until  1814,  we  can  cite  only  the  regulation  of  July  30,  1806,  which 
follows  closely  the  decree  of  July  16  and  concerns  the  latter's  exe- 
cution; also  the  decree  of  January  4,  1808,  and  the  circular  note  of 
July  25,  1810. 

2  The  sight  bonds  disappeared  after  1806.  The  reform  introduced 
in  that  year  by  virtue  of  its  very  natiire,  no  longer  involved  any 
necessity  for  their  existence. 

^  The  portion  reserved  by  the  agreements  has  entered  into  the  cur- 
rent account  proper. 

460 


THE  TREASURY  SERVICE 

far  superior  to  the  credit  of  its  agents.  Therefore,  what 
is  the  use  of  perpetuating  the  existence  of  accountable  offi- 
cers who  use  the  funds  of  the  Treasury  just  as  banks, 
would,  who  profit  by  the  incoming  taxes  and  by  the  dis- 
bursing of  public  expenditures,  who  personally  loan  to 
the  floating  debt  what  they  collect  from  the  tax- 
payers? The  memory  of  the  past  and  selfish  interest 
alone  uphold  this  worm-eaten  structure." 

The  recriminations  ending  with  the  reform  of  1889  were 
directed  against  the  character  of  banker,  abnormally  attached 
to  the  title  of  these  officers.  This  character  of  banker  mani- 
fested itself  and  still  manifests  itself  in  the  following  combina- 
tions : 

We  have  seen,  in  Chapter  XI,  that  there  exists  in  the  float-  The 
ing  debt,  on  the  side  of  resources,  the  current  account  of  the  ^^"^j**"^ 
treasurers  general  which  has  received,  since  the  beginning  of 
the  Restoration,  special  funds  (fonds  particuliers) .  The 
amount  of  these  special  funds,  until  recently,  in  order  to  sup- 
ply the  floating  debt,  had  to  equal,^  at  least  for  each  treasurer 
general,  the  amount  of  the  latter's  bond.  In  fact,  this  fund 
formerly  averaged  much  higher,^  particularly  when  a  large 
interest  return  rewarded  such  advance :  ^  the  level  of  the  cur- 
rent account  of  fhe  treasurers  general  now  runs  only  from 
35,000,000  to  40,000,000  francs,*  since  the  rate  of  interest 

^  This  rule  has  ceased  to  be  in  force.  The  amount  of  the  advances, 
says  a  circular  note  of  January  1889,  can  henceforth  be  smaller  than 
the  amount  of  the  bonds.  This  circular  note  states  at  the  same  time 
that  for  several  years  the  Administration  no  longer  observed  the  old 
provision  dating  back  to  1836. 

2  The  regulation  minimum  advance,  equal  to  the  amount  of  the 
bonds,  did  not  exceed  the  sum  of  about  28,000,000.  The  surplus, 
between  50,000,000  and  100,000,000  was  automatically  deposited  by 
the  treasurers  general,  because  they  derived  a  profit  from  it. 

^  The  rate  of  interest  allotted  to  the  advances  amounted  in  former 
times  to  33^  per  cent  on  the  total  of  the  deposits.  Then  in  the  last 
years  a  decrease  in  tariff  was  inaugurated  at  the  suggestion  of  the 
commission  on  budget.  Nowadays,  as  has  been  said,  the  uniform  rate 
has  been  reduced  to  1.25  per  cent  by  virtue  of  the  amendment  brought 
in  by  Magniaude  (discussion  of  the  budget  for  1902)  and  was  in- 
creased to  1.75  per  cent  in  1904. 

*  The  figure  of  the  current  accounts  of  the  treasurers  general 
amounted  to  17,392,000  francs  in  1816;  to  119,000,000  in  1875;  "^^7' 
000,000  in  1876,  and  100,000,000  in  1878.  (These  are  the  average 
amounts  of  the  year.)  Nowadays,  according  to  the  latest  statements, 
this  figure  reaches  no  more  than  50,731,000  francs  (June  i,  1889)  J 

461 


THE  BUDGET 

has  been  reduced  successively  to  2  per  cent,  1.75  per  cent,  1.50 
per  cent,  1.25  per  cent  by  the  decisions  of  1899,  1900,  1901 
and  1902.  In  1904,  however,  the  rate  was  increased  to  1.75 
per  cent,  always  with  a  view  to  supplying  the  floating  debt 
with  funds. 
A  Treasurer  But,  regardless  of  whether  it  is  a  question  of  100,000,000, 
ActiWdes  50,000,000,  or  40,000,000,  it  would  be  wellnigh  impossible  to 
refuse  a  profit  to  the  eighty-six  officers  ^  who  consent  to  make 
such  considerable  advances.  This  is  why  banking  operations 
have  been  accorded  them.  The  treasurer  general,  like  a  finan- 
cial institution,  solicits  the  savings  of  the  public,  by  offering 
interest.  The  deposits  made  with  him — either  on  current 
checking  account  or  on  time — are  turned  into  the  Treasury 
at  a  rate  of  interest  higher  than  that  paid  by  the  treasurer 
general ;  ^  the  difference  between  the  yield  of  the  two  rates 
constitutes  his  profit. 

These  operations,  however,^  necessarily  involve  operations 

50,598,800  francs  (January  i,  1896)  ;  40,637,700  francs  (June  30, 
1905);  39,908,800  francs  (May  i,  1907);  35,429,000  francs  (May  i, 
1908);  30,705,000  francs  (April  i,  1912). 

^  On  the  average,  100,000,000  make  more  than  1,000,000  per  treas- 
urer general ;  50,000,000  represent  almost  600,000  francs  per  officer. 

2  Thus,  while  the  large  financial  institutions  have  perpetual  trouble 
in  finding  a  secure  and  lucrative  investment  for  the  funds  deposited 
with  them,  the  treasurer  general  needs  only  to  apply  to  the  public 
treasury  to  obtain  such  an  investment. 

It  is  most  formally  forbidden,  say  the  circular  notes,  to  use  the 
funds  resulting  from  current  accounts  opened  to  private  individuals 
for  making  purchases  of  securities,  discounting  operations,  or  ad- 
vances on  the  current  account.  Treasurers  general  are  equally  for- 
bidden to  use  them  in  order  to  complete  their  collection.  They  have 
to  turn  them  over  in  total  to  the  Treasury. 

^  The  Minister  of  Finance,  in  the  course  of  the  discussion  on  March 
26,  1889,  in  the  Chamber  of  Deputies,  attributed  to  these  deposit 
accounts  wi-th  the  treasurers  general  the  advantage  not  only  of  sup- 
plying the  floating  debt  with  funds  but  also  of  grouping  the  capital 
in  the  hands  of  the  State  and  of  securing  patronage  for  the  Treasury. 
"The  movement  of  capital  which  exists  in  every  general  treasurership, 
brings  to  its  counters,  which  are  at  the  same  time  the  counters  of 
the  Treasury,  the  patronage  of  the  State.  I  ask  you  to  leave  this 
patronage  to  the  Treasury  and  not  make  of  this  patronage  a  present 
to  the  bankers  who  claim  and  demand  it."  (Speech  of  M.  Rouvier, 
March  26,  1889.) 

In  the  same  way  Senator  Pauliat,  in  his  already  cited  report,  esti- 
mates the  number  of  depositors  in  the  treasurerships  general  at 
31,445  and  concludes  with  recognition  of  the  necessity  of  not  losing 
such  patronage,    Thi§  argument  now  seems  to  be  quite  out  of  date, 

46^ 


THE  TREASURY  SERVICE 

for  the  benefit  of  customers,  who  have  not  only  to  be  solicited 
but  retained ;  among  these  operations  let  us  mention  the  exe- 
cuting of  orders  for  the  purchase  and  sale  of  stock  exchange 
securities.  It  is  true  that  the  instructions  provide  that  these 
negotiations  shall  be  made  only  for  cash,  that  doubtful  French 
securities  and  all  foreign  securities  are  excluded,  and  that 
stock  exchange  operations  are  forbidden.  No  bond  issue 
can  be  sold  over  the  counters  of  the  Treasury;  even  the  ad- 
vertising of  a  bond  issue  in  a  public  waiting  room  is  forbid- 
den ;  the  only  exception  is  with  regard  to  subscriptions  for  the 
bonds  of  the  City  of  Paris  and  of  the  Credit  Fonder  of 
France.  Transactions  in  bills  are  forbidden,  except  in  certain 
cases. ^  These  precautions  reveal  the  dangers  and  temptations 
among  which  the  officers  move,  and  from  which  they  should 
be  protected.^ 

In  these  operations  the  treasurers  general  act  in  individual   They 
and  not  official  capacities.     A  placard  posted  conspicuously  in^jiy^dual 
in  a  public  room  contains  the  caution  that  the  State  waives   Capacities 
responsibility  in  all  cases.     The  depositors  receive  no  detach- 
able counterfoil  receipt  in  the  form  indicated  above.     As  the 
banker  himself  is  a  party  to  this  transaction,  his  customers 
must  satisfy  themselves  with  receipts  on  ordinary  paper.^ 

^  The  instructions  forbid  the  legal  representatives  to  transact  for 
their  own  account  operations  which  are  prohibited  to  their  supe- 
riors. The  special  collectors  can  open  in  their  offices  special  deposit 
accounts  and  receive  orders  for  stock  exchange  transactions  for  the 
account  of  their  superior,  and  on  his  responsibility  exclusively.  As 
far  as  collectors  are  concerned,  a  decision  of  October  12,  1880, 
forbade  their  accepting  any  order  for  a  stock  exchange  transaction 
and  forbade  their  superior  to  give  them  any  authorization  which 
would  be  contrary  to  this  prohibition. 

2  In  the  course  of  the  discussion  of  March  23,  1889,  in  the  Cham- 
ber of  Deputies,  a  very  interesting  circular  note,  published  in  the 
newspapers  of  one  of  the  dcpartcments  in  the  west,  was  issued.  This 
circular  note  announced  that  the  general  Treasury  has  undertaken 
"under  the  most  advantageous  conditions  for  the  public  to  buy  and 
sell  all  French  securities  handled  at  the  stock  exchange  of  Paris  and 
negotiated  by  banks,  to  pay  the  coupons  of  French  and  foreign  securi- 
ties, etc.  .  .  .  The  orders  for  stock  exchange  transactions  are  exe- 
cuted on  the  day  following  the  filing  of  the  order  with  the  treasurer- 
ship  general."  (See  the  note  of  the  Minister  of  Finance  on  the 
subject  in  question,  referred  to  in  the  aforesaid  report,  of  Senator 
Pauliat.) 

^  The  Union  des  banquiers  des  departentents  has  often  complained 
of  the  irregular  competition  made  with  them  by  the  treasurers 
general. 

463 


THE  BUDGET 


This  Dual 
Role  Objec- 
tionable 


Marquis 
d'AudifFret 
Defends  It 


In  this  connection,  also,  these  formalities  show  what  con- 
fusion results  from  the  double  function  assigned  to  one  and 
the  same  agent.  And  when  disasters  result,  a  great  scandal 
is  caused  by  this  union  of  officer  and  banker.  Money  is  forth- 
coming for  the  public  services,  but  not  for  the  personal  debts 
of  the  unfortunate  treasurer  general.  The  State,  on  the  one 
hand,  continues  rigorously  to  collect  the  exigible  taxes,  and, 
on  the  other,  the  representative  of  the  State,  on  the  same  prem- 
ises, ceases  to  pay  his  own  creditors.  We  shall  no  longer 
dwell  on  these  painful  incidents,  so  often  touched '  upon 
above. 

The  Marquis  d'Audiffret,  however,  in  his  great  work  on 
finances,  admired  without  reserve  these  bold  combinations: 

"The  superior  administration,**  he  said,  "seemed  to 
deem  it  necessary  to  authorize  the  treasurers  general  of 
the  departements  to  maintain,  in  various  localities  in 
France,  banking  relations  with  capitalists  and  business 
men,  which  relations,  at  little  expense,  brought  very  wel- 
come resources  of  personal  credit  necessary  for  covering, 
in  case  of  necessity,  an  occasional  shortage  of  the  reve- 
nues of  the  State.  .  .  .  Owing  to  this  ingenious  combi- 
nation, the  State  profits  by  the  best  procedures  of  com- 
mercial ingenuity  for  the  execution  of  its  daily  service." 
(Systeme  financier  de  la  France.) 

Further  on,  the  Marquis  d'Audiffret — always  full  of  en- 
thusiasm for  the  organization  of  which  he  was  partly  the  or- 
iginator— adds : 

"The  activity,  the  order  of  all  the  movements  of  this 

^  The  Minister  of  Finance  said  in  the  discussion  at  the  Chamber 
of  Deputies:  "These  agents  (the  treasurers  general)  have  a  certain 
kind  of  duality  into  which  the  administration  is  unable  to  penetrate 
sufficiently  in  order  to  satisfy  itself  that  they  do  not  engage  in  opera- 
tions other  than  those  that  they  should  perform.  Such  things  have 
happened,  however,  and  we  have  proofs  of  them  in  several  circum- 
stances. There  have  been  some  disasters  among  the  treasurers  gen- 
eral. We  have  ascertained  that  in  every  instance  it  was  necessary 
to  deal  not  only  with  an  officer  who  has  performed  operations  for 
the  account  of  the  Treasury,  but  also  with  the  individual  who  has 
made  these  operations  for  his  own  account."  (Speech  of  the  Minis- 
ter of  Finance,  February  i6,  1888.) 

Read  the  instructive  statement  of  Deputy  Caillaux  who  subse- 
quently was  Minister  of  Finance;  this  statement  precedes  Caillaux's 
plan  of  reform  of  treasurerships  general,  submitted  on  May  24,  1899. 

464 


THE  TREASURY  SERVICE 

financial  mechanism  deserve  henceforth  the  just  admira- 
tion of  foreign  governments.  Superficial  minds,  self -con- 
ceited innovators  strain  themselves  by  jealous  prejudice 
or  by  inapplicable  theories  to  discredit  this  excellent  and 
useful  administrative  organization,  v^rongly  charging 
that  it  is  complicated  and  expensive." 

The  value  of  this  eulogy  is  somewhat  obscured  by  the  criti- 
cisms, a  summary  of  which  we  have  given  above,  and  which 
were  particularly  dwelt  upon  during  the  discussions  of  1888 
and  1889. 


Reform  of  the  Office  of  the  Treasurers  General 

Among  the  systems  of  reorganization  proposed,  two  deserve 
particular  attention:  The  first,  which  is  being  set  in  opera- 
tion, transforms  the  treasurers  general  into  simple  officers 
with  fixed  salaries;  the  other  suggests  that  their  functions  be 
taken  over  by  the  Bank  of  France. 

The  conversion  of  the  treasurers  general  into  agents  with 
fixed  salaries — as  is  the  case  nowadays  with  the  majority  of 
State  officers,  even  those  whose  functions  often  involve  the 
greatest  responsibility,  as  for  instance  the  paymasters,  who 
handle  funds  just  as  considerable  ^  as  their  colleagues,  the  col- 
lectors general — appears  a  realizable  reform.^  The  official 
plan  of  March  16,  1886,  which  was  included  in  the  budget 
scheme  for  1887,  was  drafted  along  this  line,  and  would  have 
yielded  a  net  saving  of  2,500,000  francs  per  annum;  the  Cham- 
ber of  Deputies,  however,  rejected  it.* 

^  Although  in  the  budgets  the  mass  of  expenditures,  generally 
speaking,  is  equal  to  the  mass  of  revenues,  the  paymasters  handle 
considerably  less  funds  than  the  collectors  general,  because  not  all 
payments  are  made  by  them.  A  certain  number  of  pay-warrants, 
payable  in  the  arrondissements,  are  paid  at  the  offices  of  the  special 
collectors  or  by  other  accountable  officers  upon  a  vise  of  the  pay- 
master. This  vise,  however,  extends  its  moral  responsibility  to  all 
the  payments. 

2  We  do  not  take  up  the  question  of  the  exaggeration  in  the  salaries 
of  the  treasurers  general,  which  is  a  favorite  subject  of  contempo- 
raneous discussion,  because  it  seems  to  us  to  be  by  far  preferable  to 
remain  on  the  more  neutral  and  more  interesting  ground  of  the  or- 
ganization of  the  institution  in  question. 

^  The  suggestion  was  not  even  submitted  to  general  discussion. 
The  commission  on  budget  made  its  objection  against  this  suggestion 
and  the  minister  did  not  insist. 

465 


Proposal 
to  Fix 
Salaries 


THE  BUDGET 


Modified 
Plan  for 
Salaries 


Legislative 
Struggle 
Over  the 
Reform 


Soon  an  analogous  suggestion,  growing  out  of  parliamen- 
tary initiative,  fared  better.  This  plan  divided  the  treasurers 
general  into  five  classes,  with  fixed  salaries  ranging  from 
12,000  to  25,000  francs.  The  commissions  or  remittances  al- 
lotted by  the  budget  of  the  State,  as  well  as  the  advances  to 
the  floating  debt,  were  abolished.  Only  the  extra-budgetary 
perquisites  paid  by  the  City  of  Paris,  by  the  Credit  Fonder,  by 
the  Caisse  des  Depots  et  Consignations,  etc.,  were  left  stand- 
ing as  extra  compensation  for  the  responsibilities.  This  was, 
in  main  outline,  a  reproduction  of  the  plan  of  1886.  In  spite 
of  the  opposition  of  the  Minister  of  Finance,^  this  suggestion, 
supported  by  the  commission,  was  approved  by  the  Chamber 
of  Deputies  by  a  rather  large  majority.^  Then,  in  the  course 
of  a  discussion  of  the  budget  for  1890,  the  Chamber — con- 
firming its  first  vote  before  the  Senate  pronounced  itself  on 
the  subject — changed  the  scale  of  the  salaries  of  the  treas- 
urers general.     (Session  of  July  2,  1889.) 

The  Senate — after  having  refused  at  first  to  follow  the 
Chamber  in  this  organic  reform  inserted  in  the  body  of  the 
fiscal  law — in  order  to  avoid  a  conflict  ^  finally  consented  to 
vote  the  budgetary  entries  of  the  deputies.  The  Government 
then  deemed  itself  authorized  to  express  through  administra- 
tive provisions  the  reform  entered  only  in  figures  in  the  fiscal 


*  The  most  important  difference  pointed  out  by  the  Minister  of 
Finance  concerned  extra-budgetary  emoluments,  which  the  new  plan 
left  to  the  treasurers  general  as  compensation  fo'r  the  responsibility, 
while  the  plan  of  M.  Sadi  Carnot  of  1886  included  the  proceeds  of 
these  emoluments  among  the  revenues  of  the  budget  and  allotted  to 
the  treasurers  general  special  premiums  in  order  to  compensate  their 
responsibility.  This  portion  of  the  old  official  plan  was  undoubtedly 
to  be  preferred  to  the  provision  which  was  taken  in  its  place.  "You 
can  take  the  responsibility  from  them,"  said  the  minister,  "but  if  you 
leave  the  responsibility  with  them,  pay  them  for  it.  .  .  .  Private 
establishments  should  not  contribute  to  the  salary  of  public  officers. 
.  .  .  You  cannot  afford  to  put  them  in  a  humiliating. situation  which 
is  given  in  certain  industrial  establishments  to  the  officers  who  are 
responsible  for  the  cash  register,  but  who  are  authorized  to  accept 
tips."  (Speech  of  M.  Rouvier,  Minister  of  Finance,  March  26, 
1889.) 

2  Three  hundred  and  eighty-seven  deputies  voted  for  their  adoption 
and  137  against  them.  (Session  of  March  26,  1889.) 

^  The  question  of  the  treasurers  general  had  almost  brought  about, 
during  the  closing  days  of  the  session  of  1889,  a  conflict  between  the 
two  chambers  analogous  to  the  one  we  have  described  above.  In  the 
evening  of  July  15,  1889,  only  several  hours  prior  to  the  reading 
of  the  decree  closing  the  session,  the  Senate  decided  to  yield. 

466 


THE  TREASURY  SERVICE 

law,  and,  therefore,  issued  the  decree  of  December  31,  1889.^ 
The  organization  of  treasurerships  general  was  thus  tem- 
porarily regulated  by  a  simple  act  of  the  executive  power. 

According  to  the  decree  of  1889,  which  was  amended  by 
the  decrees  of  May  31,  1899,^  and  of  January  6,  1908,  the 
treasurers  general  who  become  officers  receive,  regardless  of 
their  class  (rank),  a  budgetary  salary  of  12,000  francs. 

All  commissions  or  remittances  which  existed  in  the  budget 
of  the  State  and  of  the  Legion  of  Honor  were  abolished. 
There  were  left  only,  for  their  benefit,  the  extra-budgetary  re- 
mittances paid  by  the  Caisse  des  Depots  et  Consignations,  by 
the  Credit  Foncier,  by  the  City  of  Paris,  etc.,  which  were  in- 
tended to  compensate  them  for  their  responsibility,  as  well  as 
allotments  from  the  floating  debt  proportionate  to  the  deposits 
of  their  own  funds. 

The  budget  provides  for  the  salaries  of  their  appointed  per-   cash 
sonnel  and  allows  them,  besides,  by  contract,  a  stipend  for   Results 
sundry  expenditures  and  for  materials;  the  amount  of  this  is   Reform 
determined  by  ministerial  decision.     Finally,   Article  29  of 
the  budget  law  of  February  2^,  191 2,  stipulated  that  the  net 
proceeds  of  the  office  of  a  treasurer  general  should  no  longer 
exceed  40,000  francs  per  annum,  and  the  surplus  was  to  be 
turned  over  to  the  Treasury.     As  a  result  of  this  procedure, 
60,000  francs  have  already  been  entered  among  the  sundry 
profits  of  the  budget  for  191 3. 

The  fixed  salaries  of  87  treasurers  general  cost  the  budget 
1,044,000  francs;  the  extra-budgetary  allowances  are  esti- 
mated at  1 ,650,000  francs,  and  the  profits  on  current  accounts 
opened  to  private  individuals  yield  about  275,000  francs  net.^ 
Taking  into  account  the  60,000  francs  turned  over  to  the 
budget  item  of  sundry  profits,  we  arrive  at  a  total  of  approxi- 
mately 2,909,000  francs  of  emoluments,  which,  in  turn,  repre- 
sents the  average  salary  of  33,400  francs  per  incumbent. 

1  A  law  in  the  course  of  preparation  must  always  sanction  the  pro- 
visions of  the  decree  of  December  31,  1889;  the  annual  budgets,  by 
the  way,  confirm  these  provisions. 

2  This  decree  of  May  31,  1899,  like  the  preceding  decree  of  1889, 
was  prompted  by  an  amendment  which  was  due  to  parliamentary 
initiative  and  was  voted  in  the  course  of  a  discussion  on  the  budget. 

•^  The  interest  paid  by  the  floating  debt,  according  to  statistics  con- 
tained in  parliamentary  reports,  would  reach  the  figure  of  673,000 
francs,  from  which  must  be  deducted  400,000  francs  of  interest  paid 
to  holders  of  current  accounts.  From  this  a  net  profit  of  273,000 
francs  results  for  the  treasurers  general. 

467 


THE  BUDGET 


How  the 
Economies 
Were 
Effected 


Proposed 
Reforms 


In  1880,  the  treasurers  general  drew  10,000,000  francs; 
while  nowadays  they  cost  but  little  over  7,000,000,  which  are 
obtained  by  adding  to  their  2,909,000  francs  of  salaries  the 
4,000,000  paid  or  allotted  for  personnel  and  material  expendi- 
tures. The  reduction  thus  reaches  almost  3,000,000,  or  30 
per  cent,  at  a  time  when  the  services  have  been  very  much  de- 
veloped, and  when,  on  the  contrary,  the  salaries  of  all  other 
officers  have  been  increased.  These  figures  show  the  impor- 
tance of  the  reform. 

The  main  economy  realized  consists  in  the  abolition  of  the 
commissions  from  revenues  and  expenditures,  which  amounted 
in  former  times  to  3,350,000  francs,  and  of  the  commissions 
resulting  from  the  working  of  the  current  account  at  reciprocal 
interest,  the  mechanism  of  which  fixed  the  character  of  banker 
on  every  treasurer  general.  As  we  have  seen,  this  current 
account  of  the  Treasury  is  now  kept  only  in  the  capitals;  the 
treasurers  general  exercise  their  full  role  as  officers  without 
the  banking  privileges  originally  intended  to  furnish  the  float- 
ing debt  with  funds;  these  banking  operations  will  undoubt- 
edly soon  disappear.^ 

Another  suggested  reform  of  the  treasurerships  general, 
submitted  to  the  Chambers  long  ago,  consists  of  combining  the 
service  of  assessment  and  the  service  of  collection  of  direct 
taxes.  The  treasurer  general  and  the  director  of  direct  taxes 
in  case  of  such  combination  would  be  merged  into  a  single  in- 
dividual with  the  functions  of  both.  The  remittances,  fees, 
current  accounts,  banking  operations,  etc.,  would  then  disap- 
pear completely,  making  room  for  fixed  salaries.^ 

The  plan  to  create  regional  treasurerships  in  lieu  of  depart- 
mental, retiring  three- fourths  of  the  incumbents,  would  yield 
an  annual  saving  of  almost  3,000,000.^  The  development  of 
means  of  communication,  the  progress  made  in  the  commer- 
cial and  financial  life  of  the  country  justifies  this  suggestion 
in  the  eyes  of  its  author,  who  maintains  that  a  treasurer  gen- 
eral at  the  center  of  three  departements  would  today  be  closer 


1  It  would  be  sufficient  to  raise  from  100,000,000  to  150,000,000,  the 
margin  given  to  the  savings  banks  to  deposit  their  surplus  funds  with 
the  Treasury,  in  order  to  enable  the  floating  debt  to  avail  itself  of 
such  equivalent  immediately,  a  sum  which  would  exceed  the  deposit 
of  the  special  fund  of  the  treasurers  general. 

2  See  Chapter  XIX  on  this  subject. 

^  Articles  of  Deputy  Boudenoot  in  the  Revue  politique  et  parle- 
mentaire,  issues  of  July  5  and  November  6,  1895. 


468 


THE  TREASURY  SERVICE 

to  his  subordinates  than  was  a  collector  general  in  his  one 
departenicnt  fifty  years  ago. 

Finally,  a  still  more  radical  plan  of  reform  tends  not  only 
to  deprive  the  treasurers  general  of  their  present  banking  func- 
tion— everybody  seems  to  agree  on  this  point — but  also  to  take 
from  them  every  function  of  treasury  nature  as  well  as  of 
the  shifting  of  funds.  What  is  the  use,  said  the  authors  of 
the  suggestion,  to  transfer  funds  each  day  from  the  Bank  to 
the  treasuries?  In  order  to  abolish  this  exchange,  which  is 
both  superfluous  and  costly,  it  would  be  sufficient  to  entrust 
the  Bank  with  receiving  the  deposits  of  the  accountable  officers 
and  paying  the  warrants.  If  the  depository  features  were 
looked  after  by  the  Bank,  the  public  funds  would  never  leave 
it,  except  when  finally  paid  out.  The  agents  of  the  State,  on 
the  other  hand,  would  be  limited  to  such  functions  as  they 
could  effectively  discharge,  and  these  functions  are  control 
and  accounting.  The  banking  operations  would  be  turned  over 
to  the  Bank,  the  supervision  of  the  accounting  would  rest  with 
the  State,  and  thus  both  the  Bank  and  the  State  would  per- 
form their  proper  functions. 

Some  objections,  however,  are  voiced  against  these  combi-  objections 
nations,  which  appear  so  simple.     First,  it  would  hardly  be   ^J^^^l^^^ 
possible  to  put  the  Bank,  a  private  institution,  in  charge  of 
the  control  of  revenues  and  of  expenditures  of  the  State.^ 
Only  the  technical  side  of  the  treasury  service,   therefore, 
would  come  into  consideration. 

"The  cooperation  which  can  be  demanded  of  the  Bank 
must  not  extend  to  the  complete  carrying  out  of  the  serv- 
ice of  collecting  taxes  and  disbursing  expenditures,  these 
terms  being  used  in  their  widest  sense.  .  .  .  The  State, 
therefore,  cannot  renounce,  for  the  benefit  of  an  inde- 
pendent institution,  the  management  and  the  supervision 
which,  from  all  points  of  view,  it  must  exercise  over  its 
agents,  whatever  tasks  may  be  assigned  them.  .  .  .  With 
regard  to  the  question  of  depository,  the  function  of  the 
Bank  is  limited  to  that  of  a  cashier,  who  brings  together 

^  Napoleon,  in  1806,  expressly  refused  to  entrust  to  the  Bank  of 
France  the  function  of  cashier  of  the  State,  in  spite  of  the  protection 
he  extended  this  institution.  "I  want,"  he  said,  "to  be  able  to  shift 
an  army  corps  without  the  Bank's  knowing  it,  and  the  Bank  would 
know  it  if  it  were  familiar  with  my  needs  for  money."  This  argu- 
ment, however,  does  not  have  the  same  value  under  a  representative 
form  of  government. 

469 


THE  BUDGET 

the  funds  collected  by  the  agents  of  the  Treasury,  making 
all  disbursements,  paying  the  expenditures  on  vouchers 
as  an  agent  of  the  Treasury/'  (Governmental  plan  of 
January  14,  1891,  relating  to  the  renewing  of  the  fran- 
chises of  the  Bank  of  France.) 

On  the  other  hand,  it  is  claimed  that  the  depository  service 
requires  but  oiie  or  two  officers,  in  large  departements  some- 
times three,  to  do  this  work ;  the  saving  resulting  from  such  a 
reform  would,  therefore,  be  of  little  importance,  inasmuch  as 
the  Bank  would  have  to  be  paid  for  its  cooperation.  As  far  as 
the  public  is  concerned,  it  would  be  put  to  the  inconvenience  of 
dealing  with  two  places  of  business,  often  distant  one  from 
the  other — with  the  Treasury  to  secure  its  vouchers,  and  with 
the  Bank  where  they  would  be  cashed.  It  is  possible  that  some 
day  departmental  accountable  officers  will  imitate  those  of 
Paris,^  who,  in  case  of  large  amounts,  hand  to  the  parties 
checks  payable  at  the  branches  or  at  the  agencies  [of  the  Bank 
of  France].  This,  however,  would  be  a  reform  only  as  to 
details,  and  many  useful  ones  might  be  made  without 
the  essential  bases  of  the  present  organization  being  de- 
stroyed. 


Functions 
of  the 
Bank  of 
England 


The  Treasury  in  England,  in  Germany  and  in  Belgium 

In  England,  the  State  delegates  an  important  portion  of  its 
financial  functions  to  the  Bank.  In  the  first  place  the  Bank  of 
England  has  exclusive  charge  of  the  management  of  the  pub- 
lic debt.  It  pays  directly  to  the  creditors  of  the  State  the 
interest  on  the  consolidated  and  nonconsolidated  debt  and  at- 
tends to  all  transfers  which  relate  to  these  securities.  The 
payment  of  coupons  and  the  transfer  of  securities  representing 
the  public  debt  are  thus  financial  functions  of  the  first  order 
entrusted  to  the  Bank.  In  return,  the  Bank  receives  from  the 
State  a  commission,  which  is  calculated  at  a  decreasing  rate 
and  which  amounts  approximately  to  4,500,000  francs  per 
annum.^  In  France,  where  the  number  of  bondholders  is 
greater  than  in  England  and  the  figure  of  the  debt  is  higher, 

^  The  practice  in  Paris  is  to  make  the  payments  of  sums  higher 
than  10,000  francs  by  means  of  check  on  the  Bank;  the  verification 
and  the  accounting  of  the  items  of  expenditures  rest  always  with  the 
Treasury 

'^Finance  Accounts  of  the  United  Kingdom. 

470 


THE  TREASURY  SERVICE 

it  would  be  of  no  advantage  it  seems,  even  if  the  rate  were 
the  same,  to  use  the  Bank  ^  as  an  intermediary. 

In  the  second  place,  the  account  of  the  Exchequer,  carried  It  Receives 
at  the  Bank,  receives  directly  all  the  proceeds  collected  by  the  Etc*°^^*^* 
customs  administration,  by  the  inland  revenues,  by  the  posts 
and  telegraphs,  etc.  Furthermore,  this  account  is  supplied,  in 
case  of  need,  by  supplements  resulting  from  negotiating  Ex- 
chequer bills  and  even  by  advances  of  credit,  which  the  Bank 
itself  makes  to  the  State  on  the  payment  of  interest.  All  the 
budgetary  resources,  in  a  word,  are  credited  directly  to  the 
account  of  the  Exchequer;  this  account  thus  becomes  the  great 
and  the  only  reservoir  of  the  funds  of  the  Treasury.  The 
Bank  makes  no  charge  for  handling  it;  its  profits  accrue 
through  the  very  considerable  balances  of  the  current  ac- 
count.^ 

In  brief,  the  Banks  of  England  and  of  Ireland  cooperate 
with  the  State  in  two  ways :  In  attending  to  the  payment  of 
coupons  and  in  keeping  the  transfer  records  of  the  public 
debt  for  a  commission,  a  thing  quite  new  to  us ;  ^  and  in  car- 

^  So  much  more  that,  by  virtue  oi  the  convention  of  1897,  the  Bank 
of  France  attends,  free  of  charge,  to  the  payment  of  the  coupons  of 
the  bonds,  cooperating  thus  with  the  Treasury. 

2  These  balances  necessarily  vary.  Thus  in  July  1889  they  exceeded 
250,000,000  francs,  and  fell  in  the  same  month  to  174,000,000.  In 
1890  they  amounted  to  84,000,000  in  August  and  to  97,500,000  in 
October.  In  1891  they  reached  the  figure  of  306,330,000  francs  in 
March  and  amounted  to  only  157,110,000  francs  in  June  of  the  same 
year.  In  March  "896  they  reached  the  figure  of  465,800,000  francs; 
in  September  1912,  397,000,000  francs. 

"^  The  payment  of  coupons  of  the  public  debt  resting  exclusively 
with  the  bank  is  nothing  new  to  us  because  it  has  been  experimented 
on  in  France  under  the  Restoration.  The  law  of  March  25,  1817, 
Article  140,  expressed  itself  as  follows:  "The  Minister  of  Finance 
is  authorized  to  negotiate  either  with  the  Bank  of  France  or  with 
the  Caisse  des  Depots  et  Consignations,  with  regard  to  the  payment 
of  the  interests  on  the  consolidated  debt  and  the  sinking  fund  by 
means  of  assignment  of  proceeds  hereinafter  enumerated." 

In  consequence  thereof  the  Minister  of  Finance  made  a  contract 
with  the  Bank  of  France,  which  was  rather  onerous  for  the  Treasury 
and  the  subject  of  very  sharp  criticism  in  the  Chambers.  The  Min- 
ister justified  himself  by  stating  that,  following  the  explicit  inten- 
tions of  the  legislature,  he  had  made  the  best  possible  bargain  with 
the  Bank  in  order  to  strengthen  the  national  credit  of  France  by  turn- 
ing the  entire  service  of  the  debt  and  the  revenues  and  the  expendi- 
tures over  to  this  independent  establishment;  he  furthermore  added 
that,  although  this  administration  was  rather  costly,  it  had  been  done 
very  well  because  the  last  half  year  was  paid  by  the  Bank  within  one 


THE  BUDGET 


The 
Reichsbank 


National 
Bank  in 
Belgium 


rying  the  current  account  of  the  Treasury  as  for  any  other 
customer,  and  without  compensation. 

In  Germany,  the  Bank  of  the  Empire  {Reichsbank) — or- 
ganized by  the  laws  of  March  14,  1875,  and  December  6,  1889 
— undertakes  to  pay  the  interest  on  the  debt  of  the  Empire. 
The  Reichsbank  pays,  furthermore,  the  expenditures  of  the 
superior  Treasury  of  the  Empire  (Caisse  Superieure  de  r Em- 
pire), and  collects  the  revenues  of  the  latter  in  amounts  not 
less  than  12,500  francs.  These  operations  concern  only  cer- 
tain imperial  ministries,  such  as  the  ministries  of  the  treasury, 
of  justice,  and  of  the  interior,  at  the  capital  of  the  Empire; 
the  ministries  of  foreign  affairs,  of  posts,  of  war  and  of  the 
navy  have  their  special  treasurers. 

Apart  from  this,  the  Reichsbank  maintains  the  same  rela- 
tions with  the  Imperial  Treasury  and  with  the  Treasury  of 
Prussia  that  the  Bank  of  France  does  with  the  French  Treas- 
ury.^ In  the  thirty-four  provincial  districts,  the  branches  of 
the  Reichsbank  collect  the  surpluses  of  revenues  of  the  vari- 
ous treasuries  and  in  turn  supply  them  with  funds  necessary 
for  the  payment  of  public  expenditures.  In  order  to  avail 
itself  of  these  advantages,  it  was  sufficient  for  the  State — like 
any  private  individual  presenting  the  necessary  guarantees — • 
to  open  a  current  account  against  which  credit  and  debit  en- 
tries might  be  made.  The  Treasury,  however,  must  keep,  as 
compensation  for  the  Bank,  a  minimum  credit  balance  of 
12,500,000  francs.  The  railroads,  the  posts,  etc.,  keep  sepa- 
rate accounts  with  the  Bank. 

In  Belgium,  the  National  Bank  (Banque  Nationale) — in 
conformity  with  the  laws  of  May  10,  1850,  March  20,  1872, 
and  March  26,  1900 — performs  to  the  full  extent  of  the  word, 
the  function  of  a  cashier  for  the  State.  Since  181 5,  after  its 
separation  from  France,  the  Netherlands — eager  to  repudiate 
our  organization  of  collectors  general  and  special  collectors — 
has  entrusted  to  a  single  banking  house — the  Societe  generate 
pour  Favoriser  V Industrie  Nationale — the  collection  and  trans- 
ferring of  funds  and  all  budgetary  payments.    Belgium,  upon 

month,  while  it  took  the  State  four  months  to  perform  the  same 
operation.  Nevertheless,  the  Bank  of  France  did  not  draw  the 
annual  2,700,000  francs  which  this  service  yielded  for  a  long  time. 
The  Minister  of  Finance  took  into  his  hands  the  management  of  the 
arrears  of  the  debt  beginning  with  the  first  half  year  of  1819  in 
the  departements  and  in  Paris  beginning  with  July  31,  1827. 

1  Report  of  M.  H.  Jolly,  Inspector  of  Finances.  A  Mission  in  Ger- 
many, 1889. 

473 


THE  TREASURY  SERVICE 

becoming  independent  in  1831,  first  continued  its  relations 
with  this  Bank.  Later,  as  the  result  of  certain  difficulties,  Bel- 
gium, by  a  law  of  May  5,  1850,  organized  its  National  Bank,^ 
which  was  invested  by  the  second  law  of  May  10,  1850,  with 
the  functions  of  cashier  for  the  State.  The  National  Bank 
must  open  agencies  in  every  judicial  district  and  wherever  the 
Government  may  deem  it  necessary ;-  the  personnel  shall  in- 
clude a  special  agent  called  the  cashier  of  the  State.  This 
cashier — whom  the  King  selects  from  a  list  of  candidates 
made  up  by  the  council  of  the  Bank  (conseil  de  banque) — 
keeps  his  records  in  conformity  with  the  government  regula- 
tions :  delegates  of  the  Minister  of  Finance  inspect  these  rec- 
ords and  the  Coicr  des  Comptes  verifies  them.  All  the  col- 
lectors of  taxes  and  budgetary  revenues  of  his  district  turn 
their  collections  into  his  hands.  He  pays  all  the  creditors  of 
the  State.3 

By  the  side  of  this  agent,  the  administration  of  finances  in- 
stalls another,  subordinated  directly  to  the  Administration; 
he  is  entrusted  with  directing  and  controlling  the  operations  of 
public  revenues  and  expenditures.  The  agent  of  the  Treasury 
(F agent  du  Tresor) — who  resides,  whenever  possible,  on  the 
premises  of  the  Bank  or  in  its  immediate  neighborhood — 
signs,  with  regard  to  the  revenues,  the  receipts  delivered  by  the 
cashier  of  the  State  and  detaches  the  counterfoil;  this  is  an 
analogous  operation  to  that  once  current  in  France  as  between 
the  prefects  and  the  treasurers  general.  As  far  as  expenditures 
are  concerned,  he  inspects  them  before  they  are  paid  and  puts 
his  "seen  and  approved  for  payment"  {zm  bon  a  payer)  on  the 

^  Does  the  National  Bank  have  a  monopoly?  The  Belgian  consti- 
tutional law  gives  a  negative  answer  and  proclaims  the  theory  of 
the  liberty  of  the  banks.  But,  in  fact,  the  Bank  of  Liege  is  the  only 
one  so  far  that  has  undertaken  to  issue  notes  payable  to  the  bearer 
and  on  sight  (billets  au  porteur  et  d  vue)  parallel  with  the  National 
Bank.  The  latter,  on  the  other  hand,  inserted  in  an  agreement  with 
the  State  certain  clauses  of  an  exclusive  character,  such  as  the  admis- 
sion of  its  notes  in  all  the  public  treasuries.  Therefore,  if  the 
monopoly  of  the  National  Bank  is  not  officially  recognized  in  Bel- 
gium, nevertheless  this  monopoly  exists  in  reality.  See  on  this 
subject  the  commentary  to  Article  25  of  the  new  law  in  the  remark- 
able report  of  Chevalier  Descamps  submitted  to  the  senate  on  March 
17,  1900. 

2  The  National  Bank  of  Belgium  has  about  forty  agencies. 

"  The  operations  performed  by  the  National  Bank  for  the  account 
of  the  Treasury  involve  yearly  about  4,500,000,000  of  revenues  and 
expenditures. 

473 


THE  BUDGET 

vouchers  delivered  by  the  ministerial  departments/  which  the 
holders  subsequently  present  to  the  cashier  of  the  State.  The 
latter  pays  only  vouchers  bearing  the  legend  "seen  and  ap- 
proved for  payment"  of  the  agent  of  the  Treasury,  who  thus 
holds  the  key  to  the  cash  box  in  his  hands. 
In  Belgium  Belgium  profits  extensively  by  its  relations  with  the  National 
the  State  Bank.  The  agreements — the  last  of  which  in  1900  was  ex- 
tended to  January  i,  1929 — guarantee  to  the  State  a  fixed 
share  (one- fourth  of  the  profits  exceeding  4  per  cent  on  the 
capital  and  surplus)  and,  furthermore,  special  profits  resulting 
from  the  raising  of  the  discount  rate  above  3J^  per  cent,  and 
from  a  tax  on  the  circulation  of  notes,  when  the  total  exceeds 
275,000,000  francs.  Finally,  the  funds  of  the  Treasury,  de- 
posited in  current  account  as  soon  as  they  become  available, 
are  invested  in  interest-bearing  commercial  securities  on  the 
responsibility  of  the  Bank.  It  appears  that  all  these  are  meas- 
ures which  other  countries  might  introduce  much  to  their  ad- 
vantage in  their  future  contracts. 

^  The  liquidating  department  of  the  ministry,  after  having  drafted 
the  payment  vouchers,  sends  them  to  the  Treasury,  which  submits 
them  for  the  vise  of  the  Cour  des  Comptes.  The  latter,  by  virtue 
of  its  preventive  function,  of  which  we  shall  speak  later,  verifies  these 
payment  vouchers  and  keeps,  for  reasons  of  subsequent  control,  all 
documents  substantiating  them.  Then,  after  having  approved  them, 
they  are  returned  to  the  liquidating  departments  in  order  to  be  paid. 
Then  only  begins  the  series  of  formalities  spoken  of  above. 


474 


CHAPTER  XXIV 

MAKING  DISBURSEMENTS  IN  ACCORDANCE 
WITH  APPROPRIATIONS 

The  Functions  of  the  Minister  of  Finance:  The  Financial  Mechan- 
ism; Under  the  Consulate;  Unity  Restored  Under  Restoration; 
Italy  Still  Has  Dual  Form. 

The  Service  of  the  Ordonnateurs :  The  Incurring  and  Liquidating 
of  Debts;  Check  on  Ministerial  Accounts;  Obligations  Elusively 
Incurred;  Difficulties  of  the  Comptroller;  How  Accounts  Are 
Liquidated;  Liquidation  Defined;  Payment  Vouchers;  The  Sec- 
ondary Ordonnateurs ;  Means  of  Control  Over  the  Issue  of  Pay- 
ment Vouchers:  Central  Accounting;  Control  of  the  Minister  of 
Finance  Over  the  Disbursing  Ministers:  Monthly  Estimates  of 
Expenditures  Required;  Expenditures  To  Be  Within  the  Appro- 
priations; He  Orders  the  Payment  of  Vouchers. 

Functions  of  the  Accountable  Officers:  Accountants  and  Ordonna- 
teurs; Where  the  Vouchers  Are  Paid;  Vouchers  Must  Satisfy 
Three  Requirements  Before  Being  Paid;  Documents  Accompany 
the  Voucher;  Supremacy  of  the  Minister  of  Finance;  The  Report 
of  a  Commission ;  The  Views  of  the  Commission  Adopted ;  Control 
of  Documents  Tends  to  Prevent  Fraud;  An  Illustration  of  a  Fraud; 
Other  Illustrations;  Disbursing  Agents  Verify  the  Documents; 
The  Bearer  of  a  Voucher  Must  Prove  His  Right  to  Collect. 

The  Responsibility  of  the  Paymasters:  The  Ordonnateur  Can  Compel 
Payment;  Routine  Through  Which  Such  Order  Must  Pass;  The 
Right  of  Requisition;  Penalties  for  Violations. 

Hitherto,  we  have  seen  that  the  Minister  of  Finance  alone 
directs  the  army  of  agents  charged  with  ascertaining  and  col- 
lecting the  taxes;  furthermore,  we  have  seen  him  in  control 
of  the  agents  concentrating  the  fiscal  revenues ;  and  finally,  pur- 
suant to  his  orders,  public  funds  are  transferred  as  needed. 
We  have  also  reviewed  the  current  account  of  the  Treasury 
with  the  Bank  of  France,  the  current  account  of  the  Ex- 
chequer with  the  Bank  of  England,  the  account  of  the  Empire 
with  the  Reichshank  and  the  account  of  the  State  with  the 
National  Bank  of  Belgium.  Everywhere  the  funds,  once  col- 
lected, or  otherwise  procured,  are  put  at  the  disposal  of  the 
Minister  of  Finance.  The  unity  of  the  execution  of  the  budget 
of  revenues,  the  centralization  and  the  shifting  of  funds  are 
all  in  his  hands, 

475 


THE  BUDGET 

The  Functions  of  the  Minister  of  Finance 

The  This  unity  astonished  a  foreign  officer  who  came  to  study 

Mechantsm     the  financial  institutions  of  France: 

"The  more  profoundly  I  entered  into  the  matter,  the 
more  pleased  I  was  by  the  conception  of  things  confront- 
ing me.  From  a  central  point  in  the  financial  administra- 
tion, there  spreads,  in  numerous  degrees  and  in  all  direc- 
tions, a  net  of  distinct  organs  separate  in  themselves  but 
supporting  and  restricting  each  other  in  their  actions.  At 
the  slightest  impulse,  each  of  the  thousand  wheels  will 
execute  the  movement  which  is  required."  {U Adminis- 
tration financiere  de  la  France,  by  Chevalier  de  Hock, 

1858.) 

The  unity  which  this  high  Austrian  official  quite  justly  ad- 
mired at  that  time  did  not  always  exist  in  France. 

Under  the  Constitutional  Assembly  and  then  under  the  as- 
semblies following  the  Revolution,  the  Committee  on  the 
Treasury — "charged  with  supervising  the  national  revenues 
and  with  ordering  the  transfer  of  funds  and  the  payment  of 
all  public  expenditures  approved  by  the  legislative  body"  (Ar- 
ticle 317  of  the  Constitution  of  the  5th  Fructidor,  year  HI  of 
the  Republic,  August  5,  1795) — depended  directly  upon  the 
National  Assembly.  These  functions  were  intentionally  di- 
vorced from  the  Ministry  of  Finance,  it  being  provided  by 
decree  of  March  30,  1791,  that  they  "shall  not  belong  to  any 
ministry,"  in  order  to  keep  the  execution  of  the  budget  entirely 
in  the  hands  of  the  legislature.  The  latter,  even  after  the 
revenues  and  the  expenditures  were  voted,  did  not  divest  itself 
of  this  prerogative. 
Under  the  After  the  year  VHI  (1799-1800),  the  Consulat,  by  abolish- 

Consulate  -^^^  ^^^  Committee  on  the  Treasury,  returned  to  the  executive 
branch  all  of  its  budgetary  functions.  But  the  principle  of 
unity  in  the  ministry  of  finance  had  to  withstand  a  new  trial. 
In  the  year  X  (i  801 -1802)  the  ministry  was  divided  into  two 
parts :  One  called  the  ministry  of  the  treasury  (ministire  du 
tresor),  and  the  other  the  ministry  of  finances  {ministhe  des 
■finances).  The  first  was  charged  with  the  duties  of  the  Treas- 
ury, the  transfer  of  funds,  the  creation  of  extraordinary  re- 
sources and  the  disbursement  of  expenditures.  The  second 
had  special  charge  of  the  imposition  and  collection  of  indirect 

476 


MAKING  DISBURSEMENTS 

taxes.  This  duality,  which  existed  from  1801  to  181 5,*  had 
a  reason  for  existence;  the  unity  which  is  always  necessary 
existed  in  the  person  of  Napoleon,  who  directed  the  finances 
of  France. 

With  the  Restoration,  when  the  responsibility  of  the  minis-   Unity 
ters  succeeded  the  personal  regime,^  the  ministry  of  finances   under 
soon  regained  its  unity  which  it  has  not  since  lost.     After  Restoration 
1 870- 1 87 1 — on  account  of  the  extra  heavy  amount  of  work 
under  which  the  branches  of  the  service  were  suffering — it 
was  proposed,  on  legislative  initiative,  again  to  divide  the 
ministerial  functions  between  two  ministers ;  to  which  the  fol- 
lowing reply  was  made: 

"Can  it  be  supposed  that  a  minister  of  the  Treasury 
would  be  able  to  distribute  the  resources  of  the  State  in 
such  a  way  as  to  make  them  everywhere  agree,  if  he 
did  not  have,  together  with  the  control  of  the  expendi- 
tures, the  management  of  the  taxes?"  The  same  speaker 
added:  "In  the  ministry  of  finances  things  are  bound 
together;  all  branches  of  the  service  cooperate  for  one 
common  purpose.  This  common  purpose  ...  is  the 
harmonizing  of  the  resources  and  the  obligations  of  the 
State.''  (National  Assembly,  December  13,  1872,  Speech 
of  M.  Magne.) 

The  suggestion  was  rejected  and  has  not  been  renewed. 

Even  though  the  unity  of  the  authority  of  the  Minister  of 
Finance  had  once  been  impaired  with  regard  to  the  execution 
of  the  budget,  today  this  unity  is  complete  in  France,  as  well 
as  in  almost  all  other  countries. 

In  Italy,  however,  the  Treasury  and  the  Finances  still  form,   Italy  Still 
as  under  Napoleon  I.,  two  different  ministries,  having,  by  the  ^^^^^^^"^^ 
way,  at  times  only  one  incumbent.    In  ppnciple,  however,  the 
division  is  maintained;  and  although  M.   Maghani,  Giolitti, 

^  Beginning  with  1806,  Barbe-Marbois  and  then  Mollien  occupied 
the  post  of  the  minister  of  the  Treasury;  Gaudin,  Duke  of  Gaeta, 
, occupied  the  post  of  the  Minister  of  Finance  without  interruption 
from  the  year  X  until  1815. 

2  In  1817,  when  the  administration  of  accounting  was  split  into 
administrations  of  revenues  and  expenditures,  the  Marquis  d'Audiff ret 
protested  against  this  division,  which,  he  said,  offered  on  a  smaller 
scale  the  same  objections  as  separating  the  Ministry  itself  into  two 
parts.  In  1818  Baron  Louis  lost  no  time  in  reestablishing  the  unity 
of  the  administration  of  the  accounting  in  conformity  with  the 
desires  of  Marquis  d'Audiffret. 

477 


Form 


THE  BUDGET 

Grimaldi,  etc.,  on  different  occasions,  combined  in  their  hands 
the  two  portfoHos,  the  separation  was  reestablished  with  M. 
Luzzatti  and  Colombo  after  1891  and  still  exists. 


The 

Incurring 
and 

Liquidating 
af  Debts 


The  Service  of  the  Ordonnateurs 

The  disbursing  of  expenditures,  in  its  initial  stages,  is  not 
concentrated  in  the  hands  of  the  Minister  of  Finance  as  ex- 
clusively as  is  the  supervision  of  revenues  and  the  transferring 
of  funds.  In  this  connection,  coordinate  with  the  Minister  of 
Finance,  are  the  other  ministers,  his  collccigues,  who  spend 
the  public  money.  To  govern  means  to  spend,  and  as  there 
are  twelve  ministerial  departments,  each  of  which  must  be 
charged  with  its  portion  of  governmental  functions,  in  con- 
sequence each  must  spend  according  to  the  appropriations 
made  by  the  legislature.  We  must,  therefore,  devote  our  at- 
tention to  these  new  agents  who  take  a  hand  in  the  execution 
of  the  budget,  the  ministerial  agents  who  spend,  in  order  to 
see  how  they  discharge  their  special  financial  duties.  These 
involve  three  classes  of  activities:  (i)  Incurring  obligations; 
(2)  liquidating  or  determining  the  amount  of  these  obUga- 
tions;  (3)  the  passing  of  vouchers  for  payment  (ordon- 
nancement) } 

The  incurring  of  obligations  ^  is  rather  hard  to  define ;  and, 
as  yet,  no  regulation  has  attempted  it.  They  are,  generally 
speaking,  "transactions,  the  execution  of  which  involve  im- 
mediately or  in  the  future,  the  making  or  the  increase  of  an 
expenditure."  We  must  distinguish  between  permanent  obli- 
gations, relating  to  expenditures  recurring  each  year  unless 
modified  by  some  new  decision,  ^nd  casual  obligations,  result- 
ing from  an  operation  of  a  temporary  nature. 

Although  ministers  have  always  incurred  obligations  re- 
quiring expenditures,  because  this  is  an  inherent  part  of  their 
functions,  the  entire  matter,  until  recently,  has  lacked  any  kind 

^  The  service  of  the  expenditures  causes  three  kinds  of  distinct 
operations:  i.  To  make  the  expenditure,  that  is,  incur  a  debt  to  be 
charged  against  the  State ;  2.  to  fund  the  debt  of  the  State  in  the  first 
place  by  payment  vouchers  {or  do  finance)  on  the  Public  Treasury; 
3.  to  complete  the  paying  off  of  the  debt  by  the  liquidation  of  the 
payment  vouchers.  {Dela  comptahilite  des  depenses  puhliqiies,  Paris, 
1822.) 

2  See  the  work  of  M.  Rene  Gervais,  Doctor  of  Laws,  graduate  stu- 
dent of  the  Ecole  des  sciences  politiques,  under  the  title :  Le  control^ 
des  depenses  engagees,  Paris,  1906. 

478 


MAKING  DISBURSEMENTS 

of  regulation  in  France.  The  commissions  on  budget  limited 
themselves  to  pointing  out  the  dangers  of  exceeding  the  ap- 
propriations by  urgently  recommending  to  the  ministers  not 
to  incur  obligations  beyond  the  legislative  authorizations. 

Finally,  the  law  of  December  26,  1890,  provided:  "In  each  Check  on 
ministry  there  shall  be  an  account  kept  of  the  incurred  obliga-  Account"^ 
tions  involving  expenditures.  A  report  of  this  shall  be  sub- 
mitted monthly  to  the  general  management  of  the  public  ac- 
counting division."  (Article  59.)  Two  points  have  to  be 
emphasized  in  this  text.  ~  First  of  all,  each  minister  must  keep 
an  accounting  system  of  his  own,  '*by  means  of  which  he  can 
and  should  be  kept  informed  as  to  the  financial  consequences 
of  his  actions."  (General  report  on  the  budget  for  1891.) 
All  documents,  therefore,  such  as  decrees,  orders,  contracts, 
decisions,  circular  notes,  etc.,  must  henceforth  pass  through 
the  hands  of  a  special  agent,  who  will  examine  them  as  to  their 
financial  consequences  and  will  warn  the  minister,  in  case  the 
condition  of  the  appropriations  is  such  that  the  expenditures 
cannot  be  met.  Besides,  the  law  stipulates  that  the  Minister  of 
Finance  shall  be  informed  of  all  the  obligations  requiring  ex- 
penditures incurred  by  each  of  his  colleagues,  in  order  to  en- 
able him  in  due  time  to  exercise  his  authority  against  the 
exceeding  of  appropriations.^ 

Considered  theoretically,  the  innovation  has  incontestable 
merits.  If  each  minister  were  compelled  to  take  cognizance 
of  the  financial  consequences  of  every  measure  he  proposes  or 
adopts,  and  to  formulate  these  consequences  in  precise  figures 
with  reference  to  the  corresponding  condition  of  legislative 
appropriation,  any  exceeding  of  appropriations  would  neces- 
sarily become  intentional,  responsibilities  would  be  definitely 
fixed,  and  abuses  would  cease,  particularly  if  the  Minister  of 
Finance,  in  proper  time,  opposed  his  veto  to  the  irregular  in- 
curring of  expenditures.  The  evil  would  be  curbed  at  its 
source,  according  to  the  old  maximum,  principiis  obsta. 

Unfortunately — and  the  objection  applies  to  all  preventive  Obligations 
systems  ^ — nothing  can  be  less  easily  perceived  than  the  incur-  Elusively 
ring  of  obligations  requiring  expenditures.     The  evidence  of 
the  initial  step  in  incurring  an  obligation  is  often  but  a  circular 
note,  a  letter,  a  simple  promise,  a  result  of  a  conference  or  a 

^  The  decree  of  regulation  of  March  14,  1893,  develops  successively 
each  of  these  two  kinds  of  provisions. 

2  See  later  on,  with  regard  to  the  preventive  control,  the  Italian 
and  Belgian  systems. 

479 


THE  BUDGET 

conversation.  Then,  even  though  the  incurring  of  the  obli- 
gation may  be  traced  to  its  origin,  how  may  the  amount  be 
exactly  calculated?  Very  elaborate  plans  have  been  devised 
with  bold  affirmation  of  advantages  in  use;  furthermore  the 
designers  almost  unconsciously  reduce  the  figure  of  financial 
repercussions  in  their  conceptions.  The  official  introduction 
to  the  decree  of  March  14,  1893,  acknowledged  that:  "The 
accounts  of  obligations  incurred  requiring  expenditures  can  be 
but  a  record  of  estimates;  it  can  only  give  more  or  less  ap- 
proximate estimates,  which  are  expected  to  change  in  the 
course  of  the  year,  as  the  transactions  are  brought  to  a  con- 
clusion." 
Difficulties  If  the  comptrollers,  therefore,  with  difficulty  get  hold  of  the 

Comptroller  ^"^^^^^  evidence  of  obligations  incurred,  and  if,  after  having 
obtained  possession  of  it  they  can  get  only  unreliable  figures, 
how  can  they  succeed  in  preventing  the  exceeding  of  appro- 
priations? A  particularly  competent  work  on  the  subject^ 
explains  that  conscientious  cooperation  only  can  make  the 
new  system  a  success,  "because,  many  obligations  requiring 
expenditures  are  undetermined  as  to  amount  at  the  time  they 
are  incurred."  The  law  of  December  26,  1890,  will,  there- 
fore, be  of  service  only  to  those  who  are  willing  to  execute  it 
conscientiously ;  their  number  undoubtedly  will  be  great.  Fur- 
thermore, after  fifteen  years  of  experimenting  with  numerous 
modifications  of  practice,  the  deputy  reporting  on  the  budget 
for  1905  still  hopes  that  "in  the  near  future  the  Minister  of 
Finance  will  exercise  an  effective  control  over  the  incurring  of 
expenditures." 

These  difficulties  of  execution  only  help  to  emphasize  the 
merits  of  the  perseverance  with  which  the  legislature — 
through  the  successive  enactments  of  December  28,  1895, 
March  30,  1902,  March  31,  1903,  December  28,  1908,  and 
finally  by  the  five  articles  of  regulation  of  the  law  of  July 
13,  19JI — has  carried  on  the  work  begun  in  1890.^  If  the 
exceeding  of  appropriations  can  never  be  mechanically  abol- 

^  "Comptabilite  des  depenses  engagees,"  by  M.  A.  Wilhelm,  Chief 
of  the  Service  of  the  claim  office  of  the  Navy.  In  the  Revue  maritime 
et  coloniale,  January,  1896. 

2  The  statement  of  supporting  arguments  for  the  budget  for  1909, 
however,  after  having  ascertained,  just  as  we  have  done,  that  the 
chambers  have  not  ceased  since  1890  to  increase  the  control  over 
expenditures,  suggested  charging  the  comptrollers  with  the  task  of 
control  over  the  origin  of  additional  appropriations.     In  every  case 

480 


MAKING  DISBURSEMENTS 

ished,  wise  regulations  at  least  may  succeed  in  diminishing  the 
number  and  importance  of  such  occurrences. 

The  five  articles,  147-151,  of  the  law  of  July  13,  191 1, 
stipulate:  (i)  That  the  comptrollers  of  incurred  expendi- 
tures shall  henceforth  examine  the  proposals  [i.e.  the  initial 
transactions  which  mature  into  obligations  requiring  expendi- 
tures], not  only  from  the  point  of  view  of  the  availability  of 
appropriations,  but  also  from  the  point  of  view  of  the  exact- 
ness of  estimates,  which  extraordinarily  widens  the  scope  of 
their  investigations;  (2)  that  they  shall  investigate  whether 
the  ministerial  undertakings  conform  exactly  with  the  authori-  . 
zations  of  the  Chambers  and  whether  their  consequences  do 
not  by  implication  necessitate  an  increase  of  expenditures  by 
some  other  ministry;  (3)  that  they  shall  give  their  opinions 
on  the  drafts,  decrees,  resolutions  or  decisions  submitted  to 
the  Minister  of  Finance;  (4)  in  order  to  enable  them  to  per- 
form these  functions,  all  the  substantiating  documents,  the  use 
of  appropriations,  etc.,  shall  be  placed  in  their  hands;  (5)  that 
in  case  of  irregularities,  when  the  minister  refuses  to  comply 
with  the  demands  of  the  comptroller  the  matter  is  submitted 
to  the  Minister  of  Finance.  It  is  possible  that  some  day  the 
conflict,  instead  of  stopping  at  the  Minister  of  Finance,  will 
be  carried  directly  to  the  legislature  and  the  annual  reports 
of  the  comptrollers  will  be  published  and  communicated  to 
the  Chambers.    . 

Furthermore,  the  decree  of  execution  of  August  31,  191 1, 
countersigned  by  all  the  ministers,  authorizes  periodical  meet- 
ings of  the  comptrollers  of  incurred  expenditures  at  the  min- 
istry of  finance,  under  the  chairmanship  of  the  director  gen- 
eral of  public  accounting. 

After    obligations    requiring   expenditures    have    been    in-   How 
curred,  they  must  be  liquidated  [i.e.  the  amounts  must  be  set-  ^J^°""^^ 
tied  and  determined].     The  contractors,   entrepreneurs  and   Liquidated 
various  creditors,^  in  order  to  obtain  payment  of  amounts  due 
them,  present  notes,  invoices,  memoranda,  contracts,  receipts, 
etc. — in  a  word,  all  the  evidence  required  to  support  their 

demands  for  additional  appropriations  must  be  accompanied  by  an 
opinion  of  the  comptroller  of  incurred  expenditures.  (Article  39  of 
the  fiscal  law  for   1909.) 

^  This  routine  is  not  imposed  upon  officers  and  employees  with 
regard  to  the  payment  of  their  salaries,  or  upon  bondholders  and 
pensioners  with  regard  to  the  payment  of  their  coupons.  As  far 
as  they  are  concerned,  the  liquidation  takes  place  automatically  on 
the  basis  of  the  lists  of  the  personnel  and  of  the  ledger. 

481 


THE  BUDGET 


Liquidation 
Defined 


Payment 
Vouchers 


The 

Secondary 
Ordonna- 
teurs 


claims,  with  the  amounts  thereof.  Competent  bureaus  exam- 
ine these  documents,  compare  them  with  the  orders,  ascertain 
the  work  done  and  deHveries  made,  etc.,  and  then  on  the  basis 
of  this  data  liquidate  [i.e.,  determine]  the  amount  of  the 
State's  indebtedness.  Thus,  the  correctness  of  the  accounts 
is  ascertained.  Liquidation  is  defined  as  follows  :  "Liquidation 
is  an  administrative  determining  in  the  bureaus  of  the  com- 
petent ministry  of  the  sums  due  a  creditor  of  the  State  after 
the  documents  presented  by  him  have  been  examined." 

The  liquidation  is  followed  by  the  issuing  of  a  payment 
voucher  (ordonnancement) ,  which  is  defined  as  follows:  "The 
issuing  of  a  payment  voucher  is  the  preparing  by  the  compe- 
tent minister  of  a  document  by  virtue  of  which  the  creditor 
of  the  State  is  enabled  to  get  a  payment  of  the  sums  liquidated 
for  his  benefit." 

The  issuing  of  a  payment  voucher  consists  in  turning  over 
to  the  creditor  of  the  State  an  obligation  to  pay.  Each  min- 
ister is  the  only  ordonnateiir  [voucher  issuing  officer]  for  the 
expenditures  of  his  department.  Every  payment  voucher 
(ordonnance)  emanates  from  a  minister.  According  to  the 
case,  however,  the  ministers  issue  direct  payment  vouchers 
(ordonnances  directes  de  payement)  for  the  benefit  of  ascer- 
tained creditors,  or  they  pass  delegated  collective  payment 
vouchers  (ordonnances  collectives  de  delegation)  which  may 
be  subdivided  into  individual  pay  warrants  (mandats  in- 
dividuels  de  payement)  by  the  secondary  ordonnateurs,  who 
will  be  described  later  on.  The  decree  of  May  31,  1862,  de- 
clared :  "Article  82.  No  obligation  requiring  expenditure 
for  the  account  of  the  State  will  be  paid,  unless  it  has  been 
previously  vouchered  directly  by  the  minister,  or  made  pay- 
able by  the  secondary  ordonnateurs,  by  virtue  of  ministerial 
delegation."  The  payment  vouchers  {ordonnances  de  paye- 
ment) "are  orders  on  the  Treasury  delivered  directly  to  the 
creditors  by  the  minister."  The  delegated  paynient  vouchers 
are  an  "authorization  given  by  the  minister  to  his  secondary 
ordonnateur  to  deliver  to  the  creditors  of  the  State  individual 
payment  vouchers.^ 

The  secondary  ordonnateurs  are  "chiefs  of  the  service, 
placed  under  the  orders  of  each  minister;  with  them  rests  the 
task  of  subdividing  the  amount  of  delegated  collective  pay- 
ment vouchers  into  individual    pay-warrants."      Among    the 

^  See  the  more  extensive  definitions  of  Article  84  of  the  decree  of 
May  31,  1862. 

482 


MAKING  DISBURSEMENTS 

secondary  ordonnatei^rs,  we  may  cite  the  prefects  for  the  min- 
istry of  the  interior;  the  chief  engineers  of  roads,  bridges  and 
mines  for  the  ministry  of  pubHc  works,  the  departemental 
directors  of  financial  administrations  for  the  ministry  of 
finance ;  the  commissaries  general  of  the  navy  for  the  ministry 
of  the  navy ;  the  military  commissaries,  the  directors  of  artil- 
lery, of  the  engineers,  etc.,  for  the  ministry  of  war;  the  super- 
visors of  forests  for  this  administration;  the  directors  of  stud- 
farms,  the  directors  of  various  agricultural  establishments  for 
the  ministry  of  agriculture,  etc. 

Means  of  Control  Over  the  Issue  of  Payment  Vouchers: — 
Do  the  ministers  issue  payment  vouchers  or  delegated  coUec-  Central 
tive  vouchers  without  control  ?  We  may  be  sure,  in  advance,  Accounting 
that  such  is  not  the  case.  In  the  first  place,  each  minister  con- 
trols himself  by  means  of  a  central  accounting  system,^  which 
he  is  required  to  keep  by  decree  of  May  31,  1862  (Articles 
296-305 ) ;  this  central  accounting  system  consists  of  a  journal 
(journal  general)  and  a  general  ledger  {grand-livre) ,  in 
which  are  entered  all  transactions  analyzed  under  columnar 
heads  as  follows:  (i)  Amount  of  legislative  appropriations 
by  chapter;  (2)  amount  of  the  liquidated  claims;  (3)  amount 
of  payment  vouchers  issued;  (4)  amount  of  payments.^  It  is, 
therefore,  enough  that  this  central  accounting  system  be  prop- 
erly kept  to  enable  the  ministers  to  know  the  extent  to  which 
liquidations  are  made  and  vouchers  passed  and  whether  the 
totals  are  within  the  limits  of  the  appropriations.  The  column 
bearing  the  heading,  ''Amount  of  Legislative  Appropriations 
by  Chapter,"  controls  all  the  others,  thereby  making  it  impos- 
sible unwittingly  to  exceed  the  amount  of  the  authorization. 

A  second  form  of  control,  more  potent  than  that  exercised 
by  the  interested  minister  over  himself,  lies  in  the  Minister 
of  Finance,  who  now  makes  his  appearance. 

Control  of  the  Minister  of  Finance  over  the  Disbursing 
Ministers:     The  Minister  of  Finance,  who  up  to  this  point 

^  The  Minister  of  Finance,  in  the  beginning  of  1888,  suggested  the 
organization  of  the  accounting  of  every  ministry  in  a  uniform  way 
and  placing  the  chief  of  this  accounting  division  under  his  personal 
authority,  as  is  the  case  in  Italy.  When  M.  Peytral  retired  from 
office,  this  plan  was  shelved. 

2  The  decree  of  May  31,  1862,  adds  expressly  in  the  aforesaid 
Article  296 :  "The  ministers  must  organize  their  respective  accounting 
bureaus  according  to  the  same  principles,  the  same  procedures,  and 
the  same  forms." 

483 


THE  BUDGET 


Monthly 
Estimates  of 
Expendi- 
tures 
Required 


Expendi- 
tures to  Be 
Within  the 
Appropria- 
tions 


has  had  nothing  to  do  with  the  issuing  of  payment  vouchers 
passed  by  his  colleagues,  steps  in  and  exercises  a  two-sided 
control:  (i)  From  the  viewpoint  of  the  condition  of  the 
Treasury;  (2)  from  the  viewpoint  of  the  limitations  imposed 
by  the  legislative  appropriations. 

1  The  Minister  of  Finance  is  the  best  judge  of  the  condition 
of  the  Treasury,  and  must,  therefore,  regulate  the  issuing  of 
payment  vouchers  in  accordance  with  the  funds  available  to 
meet  them.  He  accordingly  demands  of  the  ministers  a  state- 
ment of  probable  expenditures  in  their  respective  departments 
for  the  ensuing  month,  in  order  to  compare  the  totals  with 
^the  resources  of  the  Treasury  for  the  same  period  of  time.^ 
If,  from  this  comparison,  there  appears  the  possibility  of 
meeting  the  proposed  expenditures,  he  presents  for  the  signa- 
ture of  the  Chief  Executive  the  order  for  distribution  of 
funds.  The  monthly  distribution  of  funds  {distribution  men- 
suelle  des  fonds)  is  specified  in  the  decree  of  May  31,  1862,  in 
the  following  manner:  "Each  month,  the  Minister  of  Fi- 
nance shall  suggest  to  the  Chief  Executive — taking  into  ac- 
count the  demands  of  the  other  ministers — that  such  and  such 
a  distribution  of  funds  can  be  made  during  the  following 
month."     (Article  61.) 

Not  only  does  the  order  for  monthly  distribution  of  funds, 
by  the  very  fact  of  its  preparation,  keep  the  Minister  of  Fi- 
nance in  close  touch  with  the  periodical  needs  of  his  colleagues, 
but  as  soon  as  this  decree  is  issued  it  constitutes  an  engage- 
ment on  the  part  of  the  Minister  of  Finance  to  provide  for 
the  payment  of  obligations  requiring  expenditures,  the  distri- 
bution of  which  he  has  approved  for  dates  and  places  specified 
— and  further,  because  the  monthly  estimates  of  the  ministers 
have  specified  also,  beside  the  amounts,  the  dates  and  the 
places  of  payment.  In  conformity  with  these  advices,  the 
transfer  of  funds,  of  which  we  have  spoken,  is  made  with  full 
knowledge,  and  the  ordonnateurs  can  securely  issue  their  pay- 
ment vouchers. 

The  second  control  exercised  by  the  Minister  of  Finance 
over  the  ordonnateurs  consists  in  satisfying  himself  that  the 
legislative  appropriations  have  been  strictly  respected.     We 

1  Article  90  of  the  decree  of  May  31,  1862,  declared  on  the  subject 
in  question:  "The  Minister  of  Finance  provides  that  every  payment 
voucher  and  every  pay-warrant  which  does  not  exceed  the  legislative 
appropriations  be  paid  within  the  time  and  in  the  place  designated  by 
the  payment  voucher." 

484 


MAKING  DISBURSEMENTS 

have  already  seen  that  for  this  purpose  each  minister  keeps 
for  himself  an  accounting  system,  showing  the  incurred  ex- 
penditures and  the  payment  vouchers  issued  to  meet  them. 
The  ministerial  responsibility,  of  which  we  shall  speak  later, 
presents  its  threatening  possibilities  in  cases  of  infraction. 
This,  however,  is  not  sufficient  and  the  Minister  of  Finance  in 
the  last  resort  watches  to  see  that  no  voucher  is  paid  without 
an  appropriation  or  with  appropriations  other  than  the  one 
intended.  The  work  of  the  legislature  cannot  be  too  scrupu- 
lously protected.  Hence,  the  Minister  of  Finance  checks  all 
payment  vouchers  passed  by  his  colleagues.^  In  order  to 
execute  this  vise  effectively,  he  recapitulates  at  his  office  for 
the  general  transfer  of  funds  the  amount  of  each  legislative 
appropriation  by  chapter.  Then  he  compares  with  the  items 
of  the  table  of  additional  appropriations,  annulments  and  pay- 
ment vouchers,  which  are  always  kept  up-to-date,  the  amounts 
of  newly  issued  payment  vouchers  transmitted  to  him  by  the 
disbursing  ministers.^  In  case  these  payment  vouchers  fall 
within  the  limits  of  the  unexpended  balances  of  legislative 
appropriations  and  within  the  provisions  of  the  order  covering 
the  monthly  distribution  of  funds,  the  Minister  of  Finance 
approves  them.  If,  on  the  contrary,  they  exceed  in  one  chap- 
ter or  another  the  limit  of  legislative  authorizations,  the  dis- 
bursing minister  is  informed  that  the  excess  amount  cannot  be 
approved  without  the  passing  of  a  supplementary  appropria- 
tion ;  and,  in  case  the  figures  fixed  by  the  order  of  monthly  dis- 
tribution of  funds  are  exceeded,  the  excess  is  rejected  during 
the  following  month.  In  a  word,  **every  payment  voucher 
in  order  to  be  passed  by  the  Minister  of  Finance  must  apply 
against  a  regularly  made  appropriation  and  must  be  included 
within  the  limits  of  the  monthly  distribution  of  funds."  (Ar- 
ticle 83  of  the  decree  of  May  31,  1862.) 

After  having  sent  to  his  colleagues  the  approved  payment   He  Orders 
vouchers,  the  Minister  of  Finance  hastens  to  notify  each  treas-   the  Payment 
urer  general  of  the  amount  which  is  to  be  paid  by  each  in  his 

1  Furthermore,  we  have  seen  above  that  the  Minister  of  Finance 
avails  himself  of  the  cooperation  of  his  comptrollers  of  incurred  ex- 
penditures by  virtue  of  the  laws  of  December  26,  1908,  and  July  13, 
1911. 

2  The  payment  vouchers  of  the  Minister  of  Finance,  just  as  all 
others,  pass  through  the  vise  of  the  administration  for  the  transfer 
of  funds  and  undergo  the  same  kinds  of  control  as  those  of  his 
colleagues. 

485    . 


of  Vouchers 


THE  BUDGET 

departement.  The  abstracts  of  the  payment  vouchers,  accom- 
panied by  a  document  authorizing  the  payment,  are  called 
delegated  credits  (credits  delegnes).  We  shall  soon  see  what 
use  is  made  of  them  by  the  paymasters. 


Accountants 
and  Ordon- 
nateurs 


Where  the 
Vouchers 
Are  Paid 


Functions  of  Accountable  Officers 

The  ordonnateiirs  are  supposed  to  deliver  the  payment 
vouchers  to  the  creditors.  'The  ordonnateurs  must  deliver 
under  responsibility  to  the  interested  parties  the  extracts  from 
payment  vouchers  or  from  notices  taking  the  place  of  them  or 
from  pay-warrants,  which  the  interested  parties  are  to  pre- 
sent at  the  counter  of  the  Treasury."  (Decree  of  May  31, 
1862,  Article  86.) 

As  soon  as  the  creditors  are  equipped  with  their  payment 
vouchers  and  the  accountable  officers  are  duly  notified,  the 
Minister  of  Finance  must  perform  his  third  function,^  to  wit, 
actually  pay  the  public  obligations  requiring  expenditure 
through  the  intermediary  of  his  accountable  officers. 

The  accountable  officers  constitute  a  class  of  agents  essen- 
tially distinct  from  the  ordonnateurs.  As  far  as  revenues  are 
concerned,  the  assessing  of  taxes  in  certain  cases  is  separated 
from  the  collection.  In  connection  with  expenditures,  the 
separation  of  the  ordonnateurs  from  the  accountable  officers 
is  an  absolute  rule.  "The  functions  of  an  administrator  and 
ordonnateur  are  incompatible  with  the  functions  of  an  ac- 
countable officer,"  says  the  ordinance  of  September  14,  1822. 
The  decree  of  May  31,  1862,  renews  in  the  same  terms  (Arti- 
cle 17)  the  provision  with  regard  to  this  incompatibility,  which 
is  a  fundamental  principle  of  our  financial  organization.  No 
confusion  of  persons  can  exist  as  between  the  branch  of  serv- 
ice which  ascertains  the  status  of  a  creditor  of  the  State  and 
that  branch  which  executes  the  payment. 

Who  are  the  agents  that  honor  the  payment  vouchers  is- 
sued by  the  ordonnateurs?  They  are  called  the  central  paying 
cashier  in  Paris,  and  treasurers  general  in  the  departements. 

^  The  three  functions  of  the  Minister  of  Finance  in  matters  of  pub- 
lic expenditures,  which  we  have  reviewed,  consist  of:  (i)  Distrib- 
uting of  funds  in  conformity  with  the  monthly  decree,  in  such  a  way 
that  all  expenditures  will  be  exactly  paid  on  the  dates  and  in  the 
localities  indicated;  (2)  Satisfying  himself  that  the  legislative 
appropriations  have  not  been  exceeded;  (3)  Actually  paying  the 
creditors  of  the  State  the  sums  due  them. 

486 


MAKING  DISBURSEMENTS 


The  treasurer  general  in  each  departement  is  responsible  for  all 
payments  to  the  Minister  of  Finance  and  to  the  Cour  des 
Comptcs.  The  special  collectors  and  the  collectors  are  under 
his  orders. 

There  are  no  longer  in  each  ministry  paymasters  (payetirs)^ 
properly  speaking,  as  was  the  case  under  the  old  regime,  where 
the  ministry  of  war,  of  the  navy,  the  administration  of  roads 
and  bridges,  the  household  of  the  King,  the  marshal's  office 
had  independent  paymasters  whom  Necker  vainly  attempted 
to  attach  to  the  Controle  General.  In  the  first  year  of  the 
Restoration,  the  paymasters  general  of  the  ministry  of  war, 
of  the  navy,  etc.,  still  retained  their  individual  treasuries.  The 
ordinance  of  September  14,  1822,  issued  by  de  Villele  united 
all  these  under  the  sole  authority  of  the  Minister  of  Finance 
by  providing:  "No  funds  shall  be  kept,  nor  shall  any  public 
treasury  be  managed  by  other  than  an  agent  under  the  orders 
of  the  Minister  of  Finance  and  responsible  to  him  and  amen- 
able to  justice  before  our  Coiir  des  Coniptes/'  And  this  rule 
is  still  in  force. 

The  duties  imposed  upon  the  paying  agents,  thus  arranged   Vouchers 
in  an  hierarchical  scale,  under  the  sole  authority  of  the  Min-   ^"^^ 
ister  of  Finance  are  of  a  three-fold  nature:     (i)  To  satisfy   xliree'Re 
themselves  that  the  authorizations  have  not  been  exceeded;   quirements 
(2)  to  verify  the  documents  supporting  each  claim;   (3)  to 
demand  of  the  party  receiving  the  payment  a  receipt  in  due 
form. 

The  authorizations  within  the  limits  of  which  each  treasurer 
general  must  keep  his  payments  are  the  delegated  credits 
(credits  delegites)  of  which  we  have  spoken.  It  is  not  neces- 
sary that  the  departmental  agent  should  have  knowledge  of  all 
the  legislative  appropriations  in  France.  He  is  concerned 
only  with  those  touching  his  departement;  and  the  Minister  of 
Finance  informs  him  as  to  these.  Therefore,  when  a  pay- 
ment voucher  or  a  pay-warrant  is  presented  at  his  office,  the 
agent  must  satisfy  himself  first,  that  the  amount  called  for 
is  within  the  limits  of  the  allotments  authorized  to  the  agent 
in  question.  Otherwise,  the  payment  cannot  be  made,  because 
the  lack  of  an  authorized  allotment  is  tantamount  to  lack  of 
funds.  ^ 

In  the  second  place,  the  treasurer  general  verifies  the  regu- 

1  The  ordonnateurs,  as  we  shall  see,  can  at  times  force  the  hand  of 
the  paymasters,  but  never  if  the  appropriations  are  exceeded.  In  this 
case,  the  veto  of  the  paymaster  is  absolute  and  final. 

487 


Before 
Being  Paid 


THE  BUDGET 


Documents 
Accompany 
the  Voucher 


Supremacy 
of  the 
Minister 
of  Finance 


larity  of  the  supporting  documents  attached  to  the  pay-war- 
rant; these  supporting  documents  consist  of  minutes  of  con- 
tracts, agreements,  certificates  of  satisfactory  conclusion  of  the 
work,  measurements,  notes,  memoranda,  etc.;  an  official  list 
of  such  documents  will  be  given  later.  Through  these  papers 
the  accuracy  of  the  data  of  the  pay-warrant  is  confirmed; 
.  errors  and  inaccuracies  are  thus  avoided  or  corrected.  In 
the  first  place,  the  disbursing  agent  finds  himself  in  a  position 
to  ascertain  that  the  work  was  carried  out  really  for  the  bene- 
fit of  the  State.  This  constitutes  the  essential  point  of  de- 
parture. The  public  treasuries  should  be  open  only  for  pur- 
poses of  paying  an  established  claim  against  the  State.  "No 
payment  can  be  made,  save  to  a  real  creditor  of  the  State, 
who  is  able  to  prove  his  claim  and  save  as  a  compensation  for 
service  rendered."  (Article  lo  of  the  decree  of  May  31, 
1862.) 

The  supremacy  which  such  control  gave  the  Minister  of 
Finance   over   his   colleagues   was   hotly   contested.     When 
de  Villele  tried  to  compel  the  ministers  to  attach  the  documen- 
tary evidence  of  an  expenditure  to  their  payment  vouchers  or 
/pay-warrants,  they  considered  it  an  encroachment  upon  their 
(autonomy.    At  the  end  of  182 1,  the  Minister  of  War  urged 
M)efore  the  commission  charged  with  studying  these  points  of 
accounting,*  that: 


"In  his  capacity  as  disbursing  agent  he  ought  to  keep 
in  his  possession  all  documents  bearing  on  an  expendi- 
ture for  which  he  had  issued  a  voucher,  because  these 
documents  afiforded  proof  of  the  correctness  of  the  ac- 
count he  rendered  the  King  and  the  Chambers,  and  a 
means  of  defense  against  accusations  should  such  be 
made." 

Besides,  he  added  that  the  responsibility  of-  the  disbursing 
minister  was  sufficient  guarantee  of  the  proper  application  of 
the  appropriations ;  and  that,  so  far  as  concerned  the  Minister 
of  Finance,  the  receipts  from  the  parties  to  whom  the  money 
was  paid  would  suffice  to  establish  the  regularity  of  the  pay- 
ments.    To  demand  more  would  mean  to  raise  the  Minister 


^  This  commission  was  composed  of  the  following  members : 
Mollien,  Gaudin,  Duke  of  Gaeta,  Barbe-Marbois  and  Allent.  The 
report  bears  the  date  of  February  25,  1822. 

488 


MAKING  DISBURSEMENTS 


of  Finance  to  the  position  of  a  judge  sitting  over  his  col- 
leagues.^ 

The  commission  turned  down  these  arguments.  It  said, 
first,  that  the  paymasters  should  not  really  sit  as  judges  of  the 
substantiating  documents,  but  that  '*they  should  verify,  when 
such  documents  were  submitted,  only  the  external  form  which 
is  determined  by  the  regulations  in  existence  on  the  matter 
in  question."  Thereafter,  the  disbursing  agents  were  to  keep 
all  the  primary  documents  and  the  minutes  of  liquidations. 
The  originals  are  always  left  with  them  and  only  copies  are 
required.  The  commission,  having  overcome  the  susceptibili- 
ties of  the  ministers,  further  devoted  itself  to  showing  the 
great  benefits  of  an  administrative  and  parliamentary  nature 
which  might  flow  from  the  proposed  measure.  The  commis- 
sion said: 

"Is  it  not  necessary  and  useful  that — since  the  ac- 
counts rendered  to  the  King  and  to  the  Chambers  are  the 
necessary  control  over  those  rendered  by  the  disbursing 
ministers — the  Minister  of  Finance  should  be  able  to  cer- 
tify that  all  payment  vouchers  were  issued  only  for  as- 
certained operations,  and  that  their  payment  really 
brought  about  the  cancelling  of  a  debt  of  the  State?  Does 
this  not  mean  a  guarantee  to  the  Chambers  that  under  no 
circumstances  can  certificates  of  indebtedness  be  issued, 
altered  or  modified  in  the  administrative  bureaus  after 
the  payment  is  made,  provided  the  substantiating  docu- 
ments prepared  according  to  the  liquidation  rules  preced- 
ing final  payment  are  attached  to  the  payment  voucher 
itself,  and  together  with  the  receipt  of  the  creditor  pass 
through  the  hands  of  the  minister  and  of  the  Coiir  des 
Comptesf"  (Report  of  the  Commission  of  February  25, 
1822.) 

In  a  word,  the  Minister  of  Finance  must  not  pay  out  mon- 
eys with  his  eyes  shut. 

The  ordinance  of  September  14,  1822,  sanctioned  these  con- 
clusions in  its  Article  10:  "Every  payment  voucher  and  every 
pay- warrant  in  order  to  be  honored  by  an  officer  of  the  Treas- 

^  The  objections  against  the  submitting  of  documents  substantiating 
the  expenditures  were  developed  with  very  much  force  in  a  work 
which  was  published  in  the  beginning  of  1822;  this  1)ook  bears  no 
signature  and  has  the  title :  De  la  comptabilite  des  depenses  puhliques, 
Paris. 

489 


The  Report 
of  a 
Commission 


The  Views 
of  the 
Commission 
Adopted 


Control  of 
Documents 
Tends  to 
Prevent 
Fraud 


THE  BUDGET 

ury  must  be  supported  by  documents  stating  that  their  pur- 
pose is  to  pay  off  in  whole  or  in  part  a  debt  of  the  State  regu- 
larly approved";  this  text  now  constitutes  Article  87  of  the 
decree  of  May  31,  1862.  The  supporting  documents  are  not 
left  to  the  discretion  of  disbursing  agents;  an  official  list  speci- 
fies for  each  ministry  just  what  documents  are  required.  *The 
substantiating  documents  mentioned  in  Articles  85  and  87 
shall  be  determined,  according  to  the  nature  of  the  operations, 
from  lists  drafted  jointly  by  the  Minister  of  Finance  and  the 
disbursing  ministers."  (Decree  of  May  31,  1862,  Article  88.) 
Generally  speaking,  this  control  of  the  documentary  papers 
tends  to  prevent  the  abuse  of  fictitious  warrants — that  is,  war- 
rants the  statements  of  which  are  falsified  and  conceal  the 
real  expenditure  under  the  legend  of  other  expenditures. 

"This  procedure  consists  in  delivering  a  pay-warrant 
for  an  expenditure  which  was  not  made,  or  for  an  ex- 
penditure other  than  the  one  that  was  made;  it  assumes 
possibly  an  imaginary  creditor,  or  an  obliging  one  who, 
becoming  an  accomplice  of  the  vouchering  officer  {or- 
donnatcnr),  consents  to  increase  a  bill  or  even  to  alter 
it."  (Circular  note  of  the  Minister  of  the  Interior  of 
March  25,  1872.) 


An  Illustra- 
tion of  a 
Fraud 


The  manager  of  a  stud  farm,  for  instance,  desiring  to  con- 
struct a  conservatory  alongside  of  his  house,  demanded  of 
his  ministry  the  authorization  of  this  expenditure;  it  was  re- 
fused. The  director,  persisting  in  his  plan,  entered  into  an 
agreement  with  the  contractors  and  raised  the  necessary  8,000 
or  9,000  francs  on  the  forage  for  the  horses.  The  fictitious 
bill  presented  to  the  disbursing  agent  called  only  for  forage, 
which,  as  a  matter  of  fact,  was  not  consumed.  As  a  result  of 
certain  data  carried  in  the  substantiating  documents,  the  fraud 
was  discovered.  The  Cour  des  Comptes  and  the  Chamber  of 
Deputies  were  aroused  ^  and  the  Administration  addressed  to 
its  subordinates  the  following  circular  note : 


''The  Minister  of  Agriculture  to  the  Directors  of  Breed- 
ing Stations:  One  of  the  directors  of  a  breeding  station 
has  fraudulently  appropriated  8,500  francs  of  the  funds 
for  the  purchase  of  forage,  and  has  applied  this  money  in 

^  Discussion  of  the  budget  for  1889,  Session  of  October  27,  1888. 

490 


MAKING  DISBURSEMENTS 

an  unauthorized  way.  He  derived  no  personal  profit 
from  it,  but  he  has  conspired  with  his  personnel  and  the 
contractors  in  order  to  violate  the  regulations.  After  an 
investigation  and  upon  an  opinion  rendered  by  the  ad- 
ministrative council,  the  officer  in  question  has  been  re- 
lieved of  his  duties."     (November,  1888.) 

Other  cases  on  file  at  the  Cour  des  Comptes  might  be  cited.    Other 
The  most  celebrated  was  discussed  by  the  Chamber  of  Depu-   ^''"strations 
ties,  in  March,  1872,  resulting  in  the  retirement  of  the  Minis- 
ter of  Finance.     Hereinafter  is  given  an  explanation  of  it  by 
the  Keeper  of  the  Seals: 

"A  prefect  had  funds  intended  for  the  purchase  of 
furniture  for  an  insane  asylum.  In  the  interval  between 
two  sessions  of  the  Conseil  General,  he  needed  funds  for 
refurnishing  a  bedroom.  Not  having  an  appropriation 
for  that  purpose,  he  had  two  ways  open  to  him ;  the  first 
was  to  await  the  convening  of  the  Conseil  General.  .  .  . 
The  second — and  here  lies  the  horrible  abuse  too  often 
committed  and  which  cannot  be  too  strongly  condemned — 
he  issued  a  fictitious  voucher  calling  for  1 1 ,000  francs  for 
an  insane  asylum,  while  in  fact,  he  used  them  for  furnish- 
ing a  bedroom."  (National  Assembly,  March  9,  1872, 
speech  of  M.  Dufaure,  Keeper  of  the  Seals,  in  reply  to 
an  interpellation  on  the  reasons  for  the  retirement  of  M. 
Pouyer-Quertier.)  M.  Dufaure  added:  "This  is  one  of 
a  thousand  cases."  * 

The  submitting  of  documents  as  an  exhibit  in  support  of  an 
expenditure,  prior  to  the  issue  of  a  pay-voucher  or  pay-war- 

^  In  fact,  attempts  to  issue  fictitious  pay-warrants  {mandats  fictifs) 
are  frequent,  not  always  for  the  purpose  of  furnishing  bedrooms 
but  for  the  purpose  of  providing  funds.  The  Cour  des  Comptes  cites 
several  examples  in  its  annual  report.  Thus,  comparing  two  accounts, 
prepared  within  an  interval  of  three  weeks,  of  work  done  on  the 
construction  of  a  fortification,  the  Cour  des  Comptes  discovered  that 
89,050  cubic  meters  of  earthwork  mentioned  in  the  first  account  had 
completely  disappeared  in  the  second.  The  89,050  cubic  meters  of 
earthwork  had  been  fictitiously  imagined  for  the  purpose  of  paying 
the  contractor  on  account.  (The  affair  of  the  Fort  of  Villeras,  report 
of  the  Cour  des  Comptes  to  the  President  of  the  Republic  for  the 
fiscal  period  1876,  July  12,  1881.) 

491 


THE  BUDGET 


Disbursing 
Agents 
Verify  the 
Documents 


rant,  while  not  preventing  abusive  practices  renders  them  at 
least  difficult  and  facilitates  their  detection. 

The  first  two  operations  of  the  disbursing  agents — the  as- 
certaining of  the  amount  of  the  appropriations  and  the  verifi- 
cation of  the  documents — are  concluded  at  the  seat  of  the 
treasurers  general  in  the  departements.  The  third,  that  of  the 
actual  payment,  does  not  rest  with  the  treasurers  general  un- 
less the  interested  parties  desire  to  be  paid  at  the  capital  of  the 
departements.  Otherwise,  the  treasurer  general  limits  himself 
to  putting  his  vise  on  the  pay-warrant  the  regularity  of  which 
he  certifies,  indicating,  at  the  same  time,  the  subordinated 
accountant,  special  collector,  collector  or  officer  of  the  excise 
administration  against  whose  office  it  is  drawn.^  The  decree 
of  May  31,  1862,  reads  as  follows: 


"The  collectors  of  finances  and  their  subordinate  col- 
lectors must  make,  from  their  collections,  all  payments 
assigned  against  their  offices.  Other  collectors  of  public 
revenues  may  also  be  called  upon  to  cooperate  with  re- 
gard to  the  disbursing  of  an  expenditure  for  the  account 
of  the  disbursing  agent."     (Article  354.) 


The 

Bearer  of  a 
Voucher 
Must  Prove 
His  Right 
to  Collect 


Regardless  of  who  the  disbursing  accountable  officer  is,  his 
duties  consist,  as  far  as  the  actual  payment  is  concerned,  first, 
in  satisfying  himself  as  to  the  identity  of  the  bearer  of  the 
pay-warrant  and  of  his  right  to  collect  the  amount  in  ques- 
tion. (This  is  done  from  documents  indicating  iiis  name  and 
occupation,  power  of  attorney,  if  he  acts  for  someone  else; 
documents  showing  his  quality  of  heir  and  legal  representative 
of  his  coheirs,  in  case  the  beneficiary  is  deceased,  etc.)  Then, 
the  creditor  is  required  to  endorse  the  voucher  or  warrant  pre- 
ceded by  the  words,  received  payment  {pour  acquit) ;  in  case 
the  creditor  is  not  able  to  write,  he  must  make  the  sign  of  a 
cross,  which  has  to  be  certified  by  two  witnesses.^  The  paying 
of  the  funds  then  terminates  the  transaction. 


*  The  agents  who  pay  on  account  of  the  treasurer  general  and 
upon  his  vise  have  only  to  verify  the  identity  of  the  payee  and  the 
genuineness  of  his  signature,  because  the  treasurer  general  before 
writing  his  vise  has  satisfied  himself  that  the  voucher  comes  within 
the  limit  of  his  delegated  appropriations  and  that  the  documents  sub- 
stantiating the  claim  are  regular. 

2  The  rules  relating  to  the  way  of  signing  the  receipts  by  the  payees 
are  outlined  in  Article  363  of  the  decree  of  May  31,  1862. 

492 


MAKING  DISBURSEMENTS 


The  Responsibility  of  the  Paymasters 


If  a  paymaster  does  not  consider  regular  the  documents  pre- 
sented, if  he  has  doubts  as  to  the  identity  of  the  interested 
party  or  as  to  the  genuineness  of  the  signature  of  the  authori- 
ties drawing  up  the  certificate  of  indebtedness,  or  if  certain 
figures  of  the  pay-warrant  or  of  the  voucher  fail  to  tally  with 
those  of  the  attached  exhibits,  etc.,  it  is  to  be  supposed  that  the 
Treasury  will  not  honor  them  until  rectified  or  furnished  with 
proper  certificates.  The  ordinance  of  September  14,  1822, 
which  imposes  so  many  obligations  upon  the  ordonnatctirs, 
gives  them  the  following  right :  In  case  of  refusing  payment, 
says  Article  15,  the  paymaster  is  obliged  to  hand  immediately 
to  the  bearer  of  the  voucher,  a  written  declaration  which  is 
properly  supplied  with  supporting  arguments.  "If,  in  spite  of 
this  declaration,  the  ordonnateur  requires  in  writing  and  on 
his  own  responsibility  that  payment  be  made,  the  paymaster 
must  make  the  payment  without  further  delay."  ^ 

This  is  a  rather  extraordinary  authority  accorded  to  the 
ordonnateurs;  this  privilege  is  known  as  the  right  of  requisi- 
tion (droit  de  requisition),  and  may  be  defined  as  follows: 
"A  right,  accorded  the  ordonnateurs  to  demand  in  certain 
cases,  in  spite  of  the  refusal  of  the  paymaster,  the  honoring 
of  vouchers  or  warrants  which  they  have  issued." 

The  ordonnateur  exercises  this  right  according  to  rather 
complicated  classifications,^  enumerated  in  a  rather  haphazard 
way  in  the  ordinance  of  1822  and  which  may  be  summed  up 
as  follows :  First  case.  The  paymaster,  before  complying  with 
the  requisition  of  the  ordonnateur,  refers  the  matter  to  the 
Minister  of  Finance,  Y^ho  communicates  with  the  competent 
minister  and  then  transmits  his  orders.  This  way  of  pro- 
ceeding, which  would  seem  to  be  the  only  correct  one,  applies 
only  to  three  exceptional  cases,  such  as  the  lack  of  available 
appropriations,  the  failure  of  approval  of  the  work  done,  and 
the  invalidity  of  the  receipt.  Second  case.  The  paymaster 
complies  immediately  with  the  requisition  of  the  ordonnateur 
and  makes  the  payment  upon  receiving  the  requisition  in 
question.     This  is  the  general  ^ule  which  applies  in  all  cases, 

^  Article  15  of  the  ordinance  of  September  14,  1822,  became  Article 
91  of  the  decree  of  regulation  of  May  31,  1862. 

2  Complications  which  doubtless  result  from  the  embarrassment  of 
the  editor,  as  seems  to  be  shown  by  certain  inversions  in  the  order 
of  the  provisions  of  Article  91. 

493 


The  Ordoti' 
natetir  Can 
Compel 
Payment 


Routine 
Through 
Which  Such 
Order  Must 
Pass 


THE  BUDGET 


The  Right 

of 

Requisition 


Penalties 

for 

Violations 


save  the  three  mentioned  above.  Let  us  cite  as  a  possible  case 
the  lack  of  agreement  between  the  figures  of  the  various  docu- 
ments or  between  their  legends,  the. earmarks  of  a  fictitious 
pay-warrant,  the  fear  of  forged  signatures,  extra  charges  not 
approved  and  various  omissions. 

The  right  of  requisition,  particularly  in  its  second  form, 
disturbs  the  logical  succession  of  deductions  which  we  have 
drawn.  It  seems  to  be  irrational  that  the  ordonnateur,  whose 
responsibility  *  is  neither  precise  nor  sanctioned,  should  be 
authorized  to  open  public  treasuries  in  spite  of  the  objections 
of  their  logical  guardians.  This  constitutes  a  defect  in  the 
organization.  The  only  excuse  for  maintaining  these  arbi- 
trary interventions  in  our  regulations  lies  in  the  great  modera- 
tion with  which  they  are  used  and  the  absence  of  abuses. 

Let  us  add,  in  conclusion,  that  the  final  article  of  the  annual 
fiscal  laws  ^  extends  its  threatening  provisions  only  to  collec- 
tors guilty  of  peculation,  without  speaking  of  the  ordonnateurs 
and  paymasters  who  are  just  as  guilty,  whenever  they  trans- 
gress the  legislative  authorizations.  This  is  an  evident  omis- 
sion. The  anathema  of  the  final  article  should  bear  with  equal 
heaviness  on  all  agents  who  have  charge  of  the  execution  of 
the  budget ;  some  day  this  will  doubtless  come  to  pass. 

The  money  taken  from  the  pockets  of  the  taxpayers  has 
thus  finally  reached  its  destination.  The  execution  of  the 
budget  is  completed.  The  whole  operation  has  set  moving 
more  than  200,000  officers,  of  whom  the  Minister  of  Finance, 
who  had  the  main  function  to  perform,  employs  about  60,000; 
all  these  agents  are  necessary  for  the  purpose  of  collecting  and 
disbursing  over  4,000,000,000  francs.  The  last  of  the  pro- 
visions of  Article  52  of  the  decree  of  May  31,  1862,  reads: 
"The  annual  fiscal  law  makes  the  necessary  appropriations  for 
the  anticipated  expenditures  of  each  fiscal  period.  The  pay- 
ment of  these  expenditures  is  provided  for  through  ways  and 
means  included  in  the  budget  of  revenues."  ^ 


1  However,  Audibert,  the  Attorney  General  of  the  Cour  des 
Comptes,  has  said  as  follows:  "From  the  principle  of  ministerial 
responsibility  resulted  the  obligation  resting  upon  the  accountable 
officer  to  pay  off,  in  case  he  is  so  directed  by  the  ordonnateur,  any 
kind  of  expenditure  even  though  not  substantiated  by  documents 
prescribed  by  the  ordinance  of  September  14,  1822."  (Speech  of 
November  3,  1885.) 

2  The  text  of  the  final  article  of  the  fiscal  law  is  cited  in  exten^o 
in  Chapter  XL 

494 


CHAPTER  XXV 
MEANS  OF  CONTROL  OVER  DISBURSEMENTS 

History  of  the  Exceeding  of  Appropriations :  The  Case  of  de  Peyron- 
net;  This  Case  and  the  System;  A  Few  Other  Cases;  Some  Viola- 
tions in  the  Ministry  of  the  Navy. 

Plans  of  Reform  the  Order  of  the  Day:  Ministerial  Responsibility; 
Impossible  to  Make  Them  Personally  Responsible;  The  Law  of 
1850;  Plan  to  Bring  the  Ordonnateur  Under  the  Chambers;  The 
Commission  on  the  Budget;  A  Bureau  of  Preventive  Control; 
Other  Proposals;  Authority  of  the  Minister  of  Finance. 

Organization  of  the  Service  of  Disbursements  and  of  Control;  Dis- 
bursements in  England ;  Supremacy  of  the  Comptroller  and  Auditor 
General;  The  Machinery;  A  Single  Paymaster;  Disbursements 
Controlled;  In  Belgium  the  Cour  des  Comptes  Is  in  Control;  It 
Must  Vise  All  Vouchers;  The  Cabinet  Can  Order  Payment  of 
a  Voucher;  The  Vise  of  the  Cour  des  Comptes  in  Belgium;  The 
Belgian  System  in  Holland,  Japan,  Etc, ;  The  Cour  des  Comptes 
in  Italy;  It  Can  Override  the  Decision  of  a  Minister;  It  Can 
Return  a  Measure  to  the  Chambers;  The  Chambers  Ignore  the 
Criticism;  The  Hidden  Commitment;  A  Comparison  of  the  Sys- 
tems of  Control;  The  Superiority  of  the  Preventive  Control;  The 
Cour  des  Comptes  the  Best  Means  of  Exercising  It;  In  Italy  the 
Disbursing  Agent  Is  the  Intendante  of  the  Province;  The  Ac- 
counting Chiefs;  Thirty- four  District  Treasuries  in  Russia;  Vouch- 
ers with  Vise  of  Trustees  of  the  Treasury. 

The  organization  [for  disbursements]  has  been  described 
as  a  thing  of  relative  perfection,  because  every  expenditure  in 
France  [has  these  characteristics]  :  (i)  [It]  is  paid  within  the 
limits  of  an  appropriation;  (2)  for  work  actually  done,  and 
(3)  [it  is  paid]  to  a  real  creditor  of  the  State.  These  three 
characteristics  have  positive  advantages.  Since,  however,  the 
practice  of  exceeding  appropriations  still  continues,  this 
method  has  certain  defects,  the  chief  of  which  we  shall  men- 
tion, and  then  indicate  the  remedies,  and  point  the  lessons  fur- 
nished by  the  legislation  of  foreign  countries. 

495 


THE  BUDGET 


History  of  the  Exceeding  of  Appropriations 


The  Case 
of  de 
Peyronnet 


This  Case 
and  the 
System 


The  Keeper  of  the  Seals,  de  Peyronnet  ^ — having  trans- 
ferred at  the  end  of  1827  the  offices  installed  on  the  first  floor 
of  the  main  building  to  an  extension  attached  to  the  palace  on 
the  Place  Vendome,  on  the  side  of  the  rue  de  Luxembourg 
(at  present  rue  Cambon) — furnished  reception  rooms  and 
particularly  a  very  fine  dining  room  on  the  first  floor.  He  had 
no  time  to  receive  the  deputies  at  dinner  in  his  dining  room. 
The  memoranda  on  the  repair  work  were  not  even  approved, 
much  less  paid,  at  the  time  of  his  going  out  of  office,  on  Janu- 
ary 3,  1828.  His  successor,  Portalis,  upon  discovering  that 
the  work  had  been  undertaken  without  an  appropriation,  re- 
fused with  more  or  less  kindness  to  pass  the  payment  vouchers 
for  the  amount  (179,865  francs),  and  asked  the  legislature 
for  a  supplementary  appropriation.  This  demand  formulated 
ex  ahrupto  by  the  new  ministry  aroused  the  deputies.  It  meant 
that  the  expenditure  had  been  made  without  an  appropria- 
tion. In  this  case  the  personal  responsibility  of  the  previous 
incumbent  of  the  ministry  was  involved.  The  law  of  March 
25,  1817,  was  referred  to;  but  as  its  articles  limited  them- 
selves to  raising  the  question  of  responsibility  without  answer- 
ing it,  the  chambers  did  not  succeed  in  determining  the  lati- 
tude of  the  provisions  of  law.  Finally,  out  of  the  Fund  of  the 
Seals  (Caisse  du  Sceau  des  Titres) — a  secret  fund  at  that 
time  outside  of  the  budget^  (it  has  since  been  attached) — 
which  fund  supplied  the  Civil  List,  the  debt  of  179,860  francs 
was  quietly  paid  without  appropriation,  and  the  matter  was 
forgotten. 

From  our  point  of  view,  it  is  necessary  to  state  that  this  in- 
fraction of  the  budgetary  rules — one  of  the  most  celebrated 
if  not  one  of  the  most  important — ^by  no  means  reflects  on  the 
branch  of  the  service  making  the  disbursements.  In  fact  no 
sum  was  paid  without  an  appropriation.  The  minister  alone 
was  in  error  in  issuing  orders  which  were  not  authorized.   But 


^  De  Villele,  for  seven  years  Prime  Minister,  author  of  laws  on 
sacrilege,  censorship,  press,  law  of  primogeniture,  etc.,  became  the 
object  of  much  animosity;  his  colleague  de  Peyronnet  became  the 
victim.  The  opposing  parties  have  exaggerated  the  affair  of  the 
dining  room. 

2  The  Caisse  du  Sceau  des  Titres  was  reincorporated  in  the  budget, 
both  in  the  matter  of  revenues  and  expenditures,  by  virtue  of 
Articles  13  and  14  of  the  law  of  January  29,  1831. 

496 


Other  Cases 


MEANS  OF  CONTROL  OVER  DISBURSEMENTS 

this  did  not  unduly  open  the  public  Treasury.  Precisely  be- 
cause of  the  fact  that  the  contractors  were  not  paid,  special 
care  was  taken  in  1829  to  pay  them  quickly  by  means  of  hidden 
funds,  in  order  to  "satisfy  creditors,  whose  work  and  goods 
had  increased  the  value  of  the  State's  property."  (Report  on 
the  Law  of  Accounts  for  the  fiscal  period  1828,  submitted  to 
the  Chamber  of  Deputies  by  F.  Lefebvre,  November  5,  1830.) 

Payments  made  without  appropriation  are  quite  exceptional.  ^  j^^^^ 
In  1830,  for  example,  during  the  July  Revolution,  the  central 
cashier  of  the  Treasury  delivered  his  funds,  amounting  to 
371,051  francs,  on  the  secret  orders  of  M.  de  Montbel,  Min- 
ister of  Finance — funds  used  for  the  payment  of  the  troops 
supporting  the  cause  of  Charles  X  (see  Chapter  IX).  Other 
cases  of  making  payments  without  appropriations,  which  lack 
the  excuse  of  the  zns  major,  might  be  cited,  if  we  scanned  the 
nearly  complete  list  contained  in  the  table  of  decouverts  of  the 
Treasury;^  and  we  should  add  the  5,744,000  francs  of  com- 
plementary appropriations  already  cited,^  which  were  de- 
manded by  the  bill  closing  the  fiscal  period  1882 — a  shortage 
occasioned  by  an  unauthorized  expenditure  in  Tunis.^  But, 
we  repeat,  these  are  rare  and  exceptional  cases. 

^  General  Account  of  Finances.  The  evolution  of  the  decouverts 
of  the  Treasury. 

Distribution  of  money  made  to  the  troops  during 
the  days  of  July,  1830  (expenditure  not  allotted  to 
the  fiscal  period,  1830) 371,051   francs 

Payments  for  the  arrears  of  the  war  (expenditure 
not  allotted  to  the  fiscal  period  1832) 270,560 

Payment  of  claims  of  elapsed  fiscal  periods  con- 
cerning the  ministry  of  war,  not  allotted  in  the  ex- 
penditures for  the  fiscal  period  1838 •  • 16,150       " 

Expenditure  of  the  ministry  of  foreign  affairs  not 
allotted  in  the  regulation  of  the  fiscal  period  1840. . .         5,000      " 

The  speech  made  by  M.  Audibert,  Attorney  General,  at  the  Cour 
des  Comptes  on  November  3,  1885,  explains  in  detail  the  nature  and 
the  cause  of  every  one  of  the  cases  of  exceeding  the  appropriations. 

2  See  Chapter  XVII. 

^  The  governors  of  colonies,  without  awaiting  the  arrival  of  the 
delegated  payment  vouchers,  used  to  open  appropriations  for  the 
secondary  ordonnateurs  by  temporary  decrees.  Thus  the  payments 
were  made  before  it  was  known  whether  there  were  any  available 
funds  from  the  appropriations  voted  by  the  legislature.  A  decree 
of  May  16,  1891,  has  made  efforts  to  put  more  order  into  this  part 
of  the  service.  Henceforth,  the  governors  can  open  only  temporary 
appropriations  on  their  own  authority  at  the  beginning  of  the  fiscal 
period.    As  soon  as  the  beginning  of  the  fiscal  period  has  passed  (a 

497 


THE  BUDGET 

Almost  never  have  the  obstacles  attending  the  issue  of 
vouchers  and  their  payment  been  overcome  at  once.  The 
Peyronnet  affair  has  been  repeated  again  and  again.  Thus  in 
1887,  the  chapters  of  the  budget  of  the  ministry  of  the  Nayy 
— under  the  titles,  Purchases  of  battleships  from  private  in- 
Some  dustrial  concerns,  and  Purchases  of  torpedo  boats — which  had 

inVe'""^  been  provided  originally  with  an  appropriation  of  6,800,000 
Ministry  of  francs,  at  the  end  of  the  year  carried  a  burden  of  15,040,000, 
the  Navy  constituting  an  excess  of  8,240,000.  The  facts  were  plain  and 
no  excuse  could  be  offered ;  the  Minister  of  the  Navy  was  uni- 
versally blamed.  Several  members  of  the  Chamber  of  Depu- 
ties endeavored  to  invoke  the  provisions  of  the  law  of  May  15, 
1850,  in  order  to  make  the  Minister  of  the  Navy  personally 
responsible.  The  majority,  however,  being  more  conciliatory, 
made  the  transaction  regular  by  voting  a  supplementary  appro- 
priation, which  the  deputy  reporting  on  the  budget  justified  in 
the  following  terms : 

*The  commission,  as  its  report  shows,  did  not  intend 
to  throw  any  veil  over  the  mistakes  made  by  the  adminis- 
tration of  the  Navy.  It  did  not,  for  a  moment,  intend  to 
excuse  the  exceeding  of  appropriations;  quite  the  con- 
trary. Nobody  sustains  the  exceeding  of  the  appropria- 
tions. .  .  .  But,  apart  from  the  administration  of  the 
Navy,  there  are  contractors  who  zvait  for  the  payment  of 
their  just  debts.  Can  the  State  fail  to  pay  its  just 
debts  ?"i 

In  this  connection,  no  payment  as  yet  had  been  made  with- 
out an  appropriation.  As  the  deputy  reporting  on  the  budget 
stated,  the  creditors  had  to  wait  until  the  supplementary  appro- 
priation had  been  voted  in  order  to  obtain  their  vouchers. 

rather  vague  term),  the  rule  which  is  applied  in  France  will  become 
obligatory,  except  for  certain  exceptional  cases.  (Report  and  decree 
of  May  16,  1891.) 

^  Another  appropriation  of  6,750,000  francs  covered  an  excess 
created  by  the  Minister  of  War  in  connection  with  extraordinary 
works  on  fortifications.  "The  operation  was  absolutely  irregular," 
said  the  senator  reporting  in  the  name  of  the  commission  on  finances 
of  the  Senate.  "The  vote  on  the  6,750,000  francs  has  the  purpose 
of  correcting  this  irregularity."  (March  31,  1888.)  The  sup- 
plementary appropriations  alone  permitted  the  payment  of  the 
expenditure. 

498 


MEANS  OF  CONTROL  OVER  DISBURSEMENTS 

The  minister  was  the  only  one  who  exposed  himself  through 
the  issue  of  unauthorized  orders. 

The  Minister  of  the  Navy,  in  1894,  expended  the  sum  of 
317,000  francs  without  an  appropriation  in  transforming  the 
hulls  and  changing  the  mode  of  propelling  battleships.  "This 
work  was  not  anticipated  at  the  time  the  budget  was  made; 
the  administration  of  the  Navy  has  carried  it  out  and  asks  us 
now  to  appropriate  the  necessary  funds  to  pay  the  bills." 
(Session  of  the  Senate,  March  17,  1894.)  The  infraction  in 
question  always  runs  against  the  fact  of  payment,  which  be- 
comes irresistible,  because  there  are  creditors  who  must  be 
satisfied. 

The  list  of  these  relatively  old  cases,  selected  because  of 
their  being  particularly  illustrative,  might  be  considerably  ex- 
tended, by  giving  examples  from  more  recent  times.  The 
same  irregularities  perpetuate  themselves  and  are  repeated 
every  year.  The  discussions  in  the  Senate — preceded  by  re- 
ports of  M.  Raymond  Poincare,  in  July,  1908 — on  the  recon- 
struction of  the  National  Printing  Office,  on  the  work  done  by 
the  ministry  of  the  Navy  on  the  battleship  Jena,  etc.,  contain 
evidence  that  expenditures  continue  to  be  incurred  prior  to 
legislative  sanction.^  Moreover,  relying  upon  the  word  of 
the  deputies  reporting  on  the  budget  ^  and  the  admission  of  the 
Minister  of  Finance  himself,^  the  majority  of  the  requests  for 
additional  appropriations  are  made  nowadays  for  the  purpose 

^  Read  the  report  of  M.  Raymond  Poincare,  on  the  bill  of  addi- 
tional appropriations  of  July  1908,  and  the  discussion  on  this  subject 
in  the  session  of  the  Senate  of  July  13,  1908.  Read  also  the  report 
of  M.  Doumer,  on  the  same  date,  which  illustrates  in  the  Chamber 
of  Deputies  the  budgetary  vicissitudes  of  transferring  the  National 
Printing  Office  to  Crenelle. 

-  The  Deputies  reporting  to  legislative  commissions  deplored  for 
a  long  time  "the  intolerable  abuses  by  virtue  of  which  the  adminis- 
trations knowingly  and  willfully  incur  new  expenditures  without  hav- 
ing previously  obtained  from  the  legislature  the  necessary  funds." 
(Reports  of  M.  Camille  Pelletan  on  the  additional  appropriations  in 
1898  and  1899.) 

^  The  statement  of  supporting  arguments  for  the  budget  for  1909 
contains  provisions  tending  to  increase  the  control  over  incurred 
expenditures.  M.  Josef  Caillaux,  Minister  of  Finance,  expresses 
himself  on  the  subject  as  follows:  "The  increase  of  additional  appro- 
priations could  have  been  stopped,  if  the  Minister  of  Finance  had 
been  informed  sooner  about  the  exceeding  of  appropriations,  which 
is  probable  in  the  various  branches  of  the  service,  instead  of  finding 
himself  confronted  by  an  accomplished  fact,  when  the  demands  of 
appropriations  are  addressed  to  him."    -(Plaii  of  the  budget  for  1909.) 

499 


THE  BUDGET 

only  of  securing  legal  recognition  for  moneys  already  spent. 
The  system  is  thus  tainted  to  a  much  greater  extent  than  is 
shown  by  a  mere  outline  of  isolated  cases. 

What  are  the  plans  of  the  reformers  with  regard  to  such 
persistent  abuses? 


Plans  of  Reform  the  Order  of  the  Day 

All  plans  of  reform  are  aimed  more  or  less  directly  at  the 
incurring  of  expenditures — the  weak  point  in  the  structure  of 
regulation.     The  solution  would  seem  to  lie  in  strengthening 
the  accounting  control  created  by  the  law  of  December  26, 
1890,  if  this  control  had  not  already  been  strengthened  as 
we  have  seen ;  ^  it  appears  necessary  to  add  several  new  pro- 
visions. 
Ministerial         In  the  first  place,  ministerial  responsibility,  if  made  eflFec- 
Responsi-        tiye,  would  end  the  irregularity.    This  responsibility,  however, 
*  *^  is  already  included  in  our  financial  codes.     At  the  very  be- 

ginning of  the  Restoration,  the  law  of  March  25,  18 17,  stipu- 
lated : 

"Article  151.  They  (the  ministers)  shall  not  make  ex- 
penditures on  their  own  responsibility  beyond  the  appro- 
priations. Article  152.  The  Minister  of  Finance  shall 
not,  under  pain  of  personal  responsibility,  authorize  pay- 
ments exceeding  the  appropriations.  .  .  ."  (Decree  of 
May  31,  1862,  Article  41.) 

According  to  this  text,  two  responsibilities  are  involved: 
that  of  the  disbursing  ministers  and  that  of  the  Minister  of 
Finance.  The  law  of  1850  is  more  forceful  still:  "Every 
expenditure  for  which  an  appropriation  has  not  been  made  .  .  . 
shall  be  charged  personally  to  the  guilty  minister."  (Law  of 
May  15,  1850,  Article  9.)  The  only  defect  in  this  commina- 
tory  article  is  the  lack  of  application.  If  the  ministers  acted 
on  their  own  account,  and  if  precise  cases  of  personal  obliquity 
could  be  made  out  against  them,  the  laws  of  181 7  and  of  1850 
would  probably  not  remain  dead  letters.  But  these  precise  and 
personal  cases  almost  never  present  themselves.  The  minis- 
ters have  to  justify  countless  operations,  known  to  them  in 
the  majority  of  cases  only  after  they  are  faits  accomplis;  they 

1  See  Chapter  XXIV. 

500 


MEANS  OF  CONTROL  OVER  pISBURSEMENTS 


are  responsible  for  officers  not  of  their  appointment,  whom 
they  found  on  coming  into  office  and  whom  they  leave  when 
going  out.  When  someone  makes  a  mistake  anywhere  in 
France  the  minister  is  blamed,  M.  Thiers  used  to  say.  How 
can  this  tangled  situation  be  cleared?  W.hat  penalty  shall  be 
meted  out  for  deeds  so  distinct  from  their  author  ?  This  was 
the  query  raised  by  M.  Dufaure  in  1872,  when  speaking  of  his 
long  parliamentary  career,  after  he  had  indeed  witnessed  the 
failure  of  five  or  six  legislative  plans  relating  to  the  responsi- 
bility of  the  ministers.  Since  1872,  several  new  plans  have 
been  devised  ^  without  yielding  result ;  new  occasions  have 
arisen  for  the  solving  of  the  problem,  which,  however,  still 
remains  as  it  was.^ 

The  law  of  1850,  in  spite  of  its  energetic  phraseology,  indi- 
cates no  authority  which  shall  find  a  verdict,  and  no  tribunal 
which  shall  prosecute  the  claim.  Nor  does  it  indicate  whether 
deliberate  violation,  prevarication  and  simple  irregularity  shall 
stand  on  a  common  plane,  or  whether  there  shall  be  extenuat- 
ing circumstances;  or  what  shall  be  done  when  several  mil- 
lions of  francs  have  to  be  claimed  from  ministers  with  no  for- 
tunes of  their  own.  The  provisions  of  this  law  heap  a  badly 
defined  threat  on  the  head  of  the  ordonnateurs.  "The  minis- 
terial responsibility  resembles  a  scarecrow,"  said  one  deputy.^ 
There  may  come  a  day  when  the  interpretation  of  the  law  of 
1850  will  result  in  a  disaster  for  an  imprudent  minister.  But, 
until  another  law  is  passed  the  barrier  against  exceeding  the 
appropriations  exists  only  in  the  imagination. 

Other  plans,  apparently  more  practicable,  tend  to  substitute 
during  the  execution  of  the  budget,  the  supremacy  of  the  Min- 
ister of  Finance.  They  recall  with  complacency  that  the  as- 
semblies of  the  Revolution  brought  the  ordonnateurs  under 
their  jurisdiction  through  the  committees  on  Treasury  and 
accounting  bureaus.  When  the  legislative  power,  they  said, 
shall  conduct  the  service  of  disbursement,  the  exceeding  of 
appropriations  will  no  longer  be  feared. 

1  See  particularly  a  plan  resulting  from  parliamentary  initiative 
in  1882  and  a  report  on  this  subject  from  1883.  (Report  of  M. 
Antonin  Dubost  on  the  suggestion  of  M.  Guichard.) 

2  Consult  on  the  subject  of  ministerial  responsibility  the  speech 
of  M.  Audibert,  Attorney  General  at  the  Cour  des  Comptes,  on 
November  3,  1885;  this  speech  is  inserted  in  the  collection  of  his 
speeches.      (National   Printing   Office,    1887.) 

^  Chamber  of  Deputies.  Session  of  January  23,  1896.  Speech  of 
M.  Delbet 


Impossible 
to  Make 
Them 
Personally 
Responsible 


The  Law  of 
1850 


Plan  to 
Bring  the 
Ordonna- 
teur  Under 
the 
Chambers 


THE  BUDGET 

"In  our  organization  the  accountable  officers  are  con- 
trolled in  every  possible  way.  The  ordonnateurs,  who 
alone  dispose  of  the  appropriations  voted  by  the  cham- 
bers, are  not  controlled.  The  bureau  of  accounting  must 
fill  this  gap.  .  .  .  The  vote  on  the  budget  is  only  a  delu- 
sion, if  the  chamber  is  not  interested  in  its  execution.*' 
(Bill  of  M.  Brisson,  repeated  by  M.  Riviere,  November 
i8,  1882.) 

Another  plan — ^without  going  so  far  as  to  deprive  the  Gov- 
ernment of  its  essential  function,  the  execution  of  the  budget — 
demands  that  the  powers  of  the  legislative  committees  be  pro- 
longed by  a  delegation  analogous  to  the  departmental  com- 
mission of  the  general  councils ;  this  delegation  would  control 
the  disbursing  ministers,  would  supervise  the  liquidation  of 
contracted  expenditures,  and  examine  the  demands  for  addi- 
tional appropriations,  etc.  Subdivided  into  sub-commissions, 
within  each  ministry,  it  would  follow  as  closely  as  possible 
the  execution  of  the  budget  without  encroaching  upon  the 
functions  of  the  executive  power.  This  alluring  program  set 
forth  in  a  report  of  M.  Gaston  Bozerian,  on  May  14,  1895, 
limited  itself  to  confirming,  together  with  the  further  devel- 
The  opments,  the  present  functions  of  the  commission  on  budget 

Commission  jn  the  matters  of  supplementary  appropriations;  when  de- 
Budget  manding  them,  the  commission  can  require  from  the  minister 
all  possible  information  on  expenditures  incurred  or  other- 
wise. Moreover,  the  Chamber  has  stipulated  that  a  schedule 
of  incurred  expenditures  shall  be  periodically  submitted  to  it. 
(Order  of  the  day  of  June  23,  1894.)  The  commission  on 
budget  probably  does  not  press  very  far  its  controlling  func- 
-  tion ;  the  commission  in  question  might  very  well  profit  from 
the  disregard  shown  it  through  the  unceasing  infractions  of  the 
ministry;  the  commission  should  submit  to  the  legislature  the 
questions  relating  to  the  responsibility  with  more  promptness 
and  vigor.  But  is  it  necessary,  in  order  to  apply  this  excess  of 
zeal,  to  split  its  members  into  eleven  or  twelve  sub-commis- 
sions? And  if  these  eleven  or  twelve  sub-commissions,  in- 
stalled within  each  ministry,  should  take  their  functions  seri- 
ously, would  they  not  run  the  risk  of  obscuring  the  authority 
of  the  minister? 

Generally  speaking,  the  control  during  the  execution  of  the 
budget  could  neither  constitutionally  nor  practically  rest  with 
the  legislature — not  constitutionally,  because  the  execution  of 

502 


MEANS  OF  CONTROL  OVER  DISBURSEMENTS 

the  budget  rests  with  the  executive;  and  not  practically,  be- 
cause the  power  of  the  legislatufe  is  so  great  that  it  cannot 
fail  to  encroach  on  somebody's  functions  the  moment  it  inter- 
feres. 

Other  plans  propose  to  fix  the  control  within  the  executive  A  Bureau 
power  itself.     One  proposes  the  creating  within  each  minis-  p^j-g^entj^g 
try  of  a  bureau  of  preventive  control,  managed  by  inspectors   control 
of  finance.     The  Minister  of  Finance,  by  means  of  his  dele- 
gates could  thus  inquire  into  the  details  of  the  affairs  of  each 
bureau,  and  satisfy  himself  as  to  the  regular  use  of  their 
appropriations. 

"All  plans  of  expenditures  for  the  various  administra- 
tive services  would  be  communicated  to  him.  The  comp- 
troller should  verify  them  from  the  point  of  view  of  'Other 
legality  and  sincerity,  and  only  after  having  satisfied  him-  Proposals 
self  as  to  the  perfect  conformity  of  the  document  in  ques- 
tion with  the  legislative  provisions  should  he  place  his 
vise  on  the  document.  .  .  .*'  (Bill  submitted  by  Deputy 
•  Pradon,  May  17,  1888.  Favorable  report  of  the  commis- 
sion on  initiative,  July  10,  1888.) 

More  recently  another  bill,  after  having  shown  to  what  ex- 
tent the  Minister  of  Finance  is  actually  ignorant  of  what  his 
colleagues  are , disbursing  and  still  more  as  to  the  debts  they 
are  incurring,  has  proposed  that  it  is  necessary  "to  organize 
within  the  Ministry  of  Finance  a  general  board  of  control  of 
public  expenditures."  Furthermore,  at  the  head  of  the  ac- 
counting division  of  each  ministry,  there  should  be  an  officer 
appointed  by  the  Minister  of  Finance  upon  suggestion  of  the 
minister  to  whom  this  accounting  division  is  subordinated. 
(Suggestion  of  May  10,  1890.)  *  These  ideas  have  now  been 
partially  put  into  effect  since  the  above-mentioned  law  of  July 
13,  191 1,  was  ^passed.  In  the  majority  of  ministries  the  in- 
spectors of  finances  direct  the  service  of  incurring  expendi- 
tures. (Laws  of  March,  1903,  and  July,  191 1.)  M.  Peytral, 
Minister  of  Finance,  was  animated  by  the  same  spirit  when 
he  officially  suggested  in  1888  that  the  management  of  the 
bureaus  of  accounting  of  all  the  ministries  be  centralized  in  his 

^  See  besides  this  suggestion  of  M.  Antonin  Proust  and  Gotteron, 
Deputies,  the  report  on  the  regulation  of  the  fiscal  period  1882, 
drafted  by  M.  Felix  Faure,  Deputy,  which  contains  a  chapter  with 
the  following  title:  Principes  de  comptabilite  legislative,  March  3, 
1890.    Refer  also  to  Chapter  XXIV. 


THE  BUDGET 

hands  in  order  to  be  able  to  follow  as  closely  as  possible  the 
operation  of  passing  payment  vouchers  and  even  of  the  incur- 
^  ring  of  expenditures  by  his  colleagues.  This  plan,  copied  from 
the  system  in  force  in  Italy/  has  been  abandoned,  because  of 
the  change  in  the  incumbency  of  the  portfolio  of  finance. 
Authority  The  reen forcing  of  the  power  of  the  Minister  of  Finance, 

Mii^ster  ^^^  conferring  upon  him  of  an  effective  supremacy  over  the 
of  Finance  Other  ministers,  the  establishing  in  France  of  an  imitation  of 
the  Bureau  of  the  Treasury  in  England — all  these,  it  may  be 
remembered,  were  touched  upon  in  the  beginning  of  this  book.^ 
We  can,  therefore,  only  renew  our  approval  of  the  tentative 
reforms.  But  in  France,  can  the  authority  of  the  Minister  of 
Finance  be  further  extended?  Will  the  disbursing  ministers 
%  tolerate  too  intimate  an  intrusipn  into  their  affairs  by  a  col- 
league, who  is  over-anxious  to  control  them?  Various  fea- 
tures of  the  precedence  enjoyed  by  the  Minister  of  Finance 
are  now  generally  recognized,  such  as  that  the  general  man- 
agement of  the  accounting  of  finances  dominates  all  other  ac- 
counting bureaus,  that  the  management  of  the  general  trans- 
fer of  funds  satisfies  itself  that  the  ministerial  vouchers  do  not 
exceed  the  legislative  appropriations,  that  the  paymasters  ver- 
ify the  documents  substantiating  the  expenditures  attached  to 
warrants,  that  the  drafting  and  the  statement  of  supporting 
arguments  of  the  budget  bill  are  exclusively  in  the  hands  of 
the  Minister  of  Finance,  that  the  latter  has  the  power  even  to 
control  the  expenditures  incurred  by  his  inspectors  in  the  sev- 
eral ministries,  the  incumbents  of  which  have  agreed  to  such 
an  arrangement.  Can  new  features  of  precedence  be  intro- 
duced? Will  the  disbursing  ministers,  rebelling  instinctively 
against  the  financial  control,  permit  new  features  of  prece- 
dence to  be  introduced,  particularly  in  case  they  anticipate  that 
these  are  likely  to  become  oppressive?  In  this  lies  the  whole 
question,  and  in  all  probability  no  satisfactory  reply  can  be 
given  at  the  present  time.  * 

If,  therefore,  in  the  course  of  the  execution  of  the  budget, 
the  direct  control  by  the  legislature  constitutes  a  dangerous 
encroachment,  if  the  control  exercised  by  the  Minister  of  Fi- 
nance proves  ineffectual  in  checking  the  course  of  his  col- 
leagues, and  if,  on  the  other  hand,  this  ministerial  initiative, 
particularly  in  certain  departments,  continues  to  follow  help- 

^  See  later  on,  the  Italian  system. 
2  See  Chapter  III. 


MEANS  OF  CONTROL  OVER  DISBURSEMENTS 

lessly  in  the  wake  of  excessive  expenditures,  cannot  other 
means  be  discovered  to  check  these  abuses  ?  The  examples  of 
foreign  countries  will  undoubtedly  afford  us  instruction. 

Organization  of  the  Service  of  Disbursements  and  of 

Control 


In  England,  a  superior  officer,  appointed  by  the  Crown — 
and  who  can  be  recalled  only  through  a  joint  address  of  the 
two  chambers — the  comptroller  and  auditor  general,  is  at  the 
head  of  the  service  of  disbursements.  Prior  to  the  nineteenth 
century,  the  Exchequer  had  exclusive  charge  of  the  verifica- 
tion of  accounts,  either  in  the  course  of  the  execution  of  the 
budget  or  after  the  closing  of  the  fiscal  period.  In  1785, 
Pitt  withdrew  from  the  Exchequer  the  auditing  of  the  ac- 
counts prepared  by  the  accountable  officers,  and  turned  this 
work  over  to  a  special  staff  called  the  audit  office.  In  1834, 
the  Exchequer  was  deprived  of  another  function — the  control 
over  the  operations  of  the  fiscal  period;  this  function  was  re- 
linquished to  the  comptroller  general. 

Finally,  in  1865,  the  control  of  the  public  funds  and  the  aud- 
iting of  the  accounts  kept  by  the  accountable  officers  after  the 
closing  of  the  fiscal  period,^  were  combined  in  the  hands  of  a 
single  officer  occupying  a  high  position;  this  officer  is  the 
comptroller  and  auditor  general  to  whom  an  assistant  comp- 
troller and  auditor  general  is  assigned. 

No  issue  can  take  place,  that  is,  no  funds  can  be  paid  out  of 
the  Exchequer,^  without  the  signature  of  the  comptroller  and 
auditor  general.  The  latter  receives  requisitions  on  the  Treas- 
ury, which  he  examines.  If  he  finds  that  they  are  correct 
and  that  they  are  in  conformity  with  the  vote  of  Parliament, 
he  countersigns  the  orders  withdrawing  the  funds  from  the 
Exchequer.  Thus,  we  have  in  England  a  superior  agent — the 
chambers  only  can  bring  about  his  recall — who  is  charged  with 
the  strict  execution  of  the  will  of  Parliament,  under  the  su- 
preme supervision  of  which  is  placed  the  entire  service  of  dis- 
bursements. 

This  service  deserves  to  be  outlined  in  this  connection.  We 
have  already  indicated  its  salient  feature,  when  speaking  of 

^  See  in  Chapter  XXIX  the  sf)ecial  function  of  the  comptroller 
and  auditor  general. 

2  The  Exchequer  means  the  English  Treasury.  The  institution 
of  the  Exchequer  was  abolished,  as  we  have  said,  in  1834. 


Disburse- 
ments in 
England 


Supremacy 
of  the 
Comptroller 
and  Auditor 
General 


THE  BUDGET 


The 
Machinery 


A  Single 
Paymaster 


the  relations  between  the  State  and  the  Bank  of  England, 
which  collects  the  tax  levies  made  by  the  various  fiscal  admin- 
istrations, attends  to  the  transfer  of  the  funds  of  the  Treasury, 
and  puts,  by  means  of  a  current  account,  the  necessary  re- 
sources at  the  disposal  of  the  agents  who  have  charge  of  the 
disbursements.  It  has  been  said,  besides,  that  the  comptroller 
and  auditor  general  alone  can  authorize  the  payment  of  funds 
out  of  the  account  of  the  Exchequer  on  the  basis  of  requisi- 
tions by  the  Treasury.  These  authorizations  are  en  bloc,  and 
the  bureau  of  the  Treasury  subdivides  them  in  proportion  to 
its  needs,  into  partial  orders  of  credit,  issued  in  conformity 
with  the  daily  demands  of  the  ministerial  departments  and 
delivered,  not  directly  to  the  creditors,  but  to  the  paymaster 
general.  In  former  times,  different  paymasters  were  in  exist- 
ence. Nowadays,  there  is  but  one  paymaster,  the  paymaster 
general,^  a  high  officer,  a  member  of  the  cabinet;  in  his  name 
is  carried  the  special  account  at  the  Bank  of  England,  which 
is  supplied  by  the  funds  paid  out  of  the  Exchequer.^  The 
payees,  notified  by  the  Treasury,  present  themselves  with  the 
letter  in  question  to  the  paymaster  general,  who  has  again  re- 
ceived from  the  disbursing  ministers  a  notification  relating  to 
the  warrants  which  were  issued.  The  payment  is  made  after 
the  documents  supporting  the  expenditure  have  been  approved 
and  a  receipt  taken  from  the  creditor.  A  single  paymaster 
general  residing  in  London  thus  attends  to  all  the  disburse- 
ments of  the  Kingdom  (excepting  the  payment  of  interest 
on  the  debt,  which  is  entrusted  to  the  Bank,  and  several  excep- 
tional cases) ;  this  is  the  peculiarity  of  the  English  system. 
In  this  connection,  we  are  very  far  from  our  eighty-seven 
treasurers  general  and  the  numerous  paymasters  under  them. 
The  existence  of  a  single  paymaster  general  in  London  would 
appear  impossible,  if  it  were  not  for  the  extent  to  which  Eng- 


*  The  financial  administrations,  customs,  inland  revenue,  posts 
and  telegraphs,  etc.,  can  deduct  from  the  amount  of  their  revenues 
the  payments  which  they  have  to  make.  For  this  purpose  they  have 
at  the  bank  a  personal  account,  a  suspense  account  (compte  d'at- 
tente)  to  which  they  deposit  all  their  gross  proceeds  and  from  which 
they  draw  the  funds  necessary  for  their  own  expenditures. 

2  The  paymaster  general  keeps  in  his  treasuries  the  funds  necessary 
for  the  daily  disbursements,  and  leaves  the  surplus  with  the  Bank 
of  England  on  a  special  account,  in  order  to  be  able  to  draw  funds 
according  to  his  needs  or  in  order  to  be  able  to  make  large  pay- 
ments by  means  of  transfers  from  and  to  the  accounts  of  individual 
bankers. 


506 


MEANS  OF  CONTROL  OVER  DISBURSEMENTS 

lishmen  avail  themselves  of  the  services  of  private  banks, 
through  which  every  payee,  no  matter  how  distant  from  the 
city,  cashes  his  warrant  at  the  counter  of  the  paymaster  gen- 
eral's  department  and  has  the  amount  of  his  payment  credited 
to  his  deposit  account.  A  high  French  officer,  sent  to  Eng- 
land on  an  inquiry  with  regard  to  this  matter,  says  that  occa- 
sionally special  arrangements  are  made  in  favor  of  some  small 
creditor,  residing  in  a  distant  village,  or  of  a  pensioned  soldier, 
for  example,  ignorant  of  the  procedure  of  banking  accounts, 
although  the  latter  are  commonly  known ;  a  special  authoriza- 
tion permits  the  latter  to  cash  his  warrant  at  a  public  treasury 
nearest  to  his  place  of  residence.  Inversely,  the  payment  of 
important  sums  is  transacted,  in  the  majority  of  cases,  by 
means  of  simple  transfers  made  at  the  Bank  of  England,  be- 
tween the  account  of  the  paymaster  general  and  the  personal 
account  of  the  creditor.  This  organization  is  distinguished  by 
its  great  simplicity  and  its  extreme  economy,  which  constitutes 
"a  most  desirable  feature  of  the  financial  system  of  Great 
Britain." 

In  brief,  England  has  committed  the  service  of  public  ex-  Disburse- 
penditures  to  a  comptroller  and  auditor  general,  who  is  inde-  cmitrolled 
pendent  of  the  executive  power  and  who  is  charged  with  en- 
forcing respect  for  the  orders  of  Parliament.  Correlatively, 
the  bureau  of  the  Treasury — the  authority  of  which  over  other 
ministerial  departments  is  preponderant  and  uncontested — is 
vested  with  the  right  of  regulating  the  issue  of  payment  vouch- 
ers by  the  ministers.  The  exceeding  of  appropriations  is  well- 
nigh  impossible  in  such  an  organization.  The  budgetary  sta- 
tistics, cited  previously  in  connection  with  the  additional  ap- 
propriations, amply  substantiate  this  contention.^ 

In  other  countries,  the  organization  of  the  preventive  con-   in  Belgium, 
trol  is  entrusted  to  the  Cour  des  Comptes.    First,  in  Belgium,^   ^«  ^^"'^ 
Article  14  of  the  law  of  October  27,  1846,  reads:    "No  pay-  f'/.l;'""^^'' 
ment  voucher  shall  be  honored  by  the  Treasury  unless  it  shows    Control 
the  vise  of  the  Cour  des  Comptes/'  The  ordonnateiirs  submit, 
prior  to  any  operation  of  payment,  their  payment  vouchers 
for  the  vise  of  the  Cour  des  Comptes.    This  vise  is  given  only 

1  See  Chapter  XVII. 

2  On  the  subject  of  the  Cour  des  Comptes  in  Belgium  read  the 
work  of  208  pages,  published  in  1892,  by  M.  Victor  Marce,  Councilor 
at  the  Cour  des  Comptes,  former  student  at  the  Ecole  des  Sciences 
Politiques,  and  his  Traite  de  la  comptabilite  ptiblique,  collection 
Dalloz,  1905. 


It  Must 

Vise  All 
Vouchers 


The 

Cabinet 
Can  Order 
Payment  of 
a  Voucher 


THE  BUDGET 

after  their  regularity  has  been  ascertained.  The  Cour  des 
Comptes,  in  this  connection,  has  the  most  extreme  latitude  of 
action.  At  the  time  of  the  discussion  of  the  law  of  October 
27,  1846,  it  was  suggested  that  the  refusal  of  the  vise  be  lim- 
ited to  cases  where  appropriations  were  exceeded,  to  irregular 
charges,  to  fictitious  pay-warrants,  etc.  Although  the  field 
still  remains  large,  the  Chamber  admitted  no  restriction  in 
order,  it  was  said,  not  to  diminish  a  necessary  control  by 
limiting  it  or  by  giving  this  control  a  definition.  The  giving 
or  refusing  of  the  znse  is  not  submitted  to  any  special  con- 
dition. The  Coiir  des  Comptes,  furthermore,  may  require  any 
substantiating  document  which  it  may  deem  to  be  useful. 
When  the  vise  is  refused,  the  cabinet  discusses  the  subject.  If 
the  cabinet  finds  it  necessary  to  decide  against  the  Cour  des 
Comptes,  the  latter  is  obliged  to  give  the  vise,  but  ivith  reser- 
vations,^ which  reservations  are  submitted  to  the  chambers, 
which  become,  in  the  last  instance,  the  judges  of  the  conflict. 

"Whenever  the  Cour  des  Comptes  does  not  deem  it 
proper  to  give  its  vise,  the  motives  of  its  refusal  are  ex- 
amined by  the  cabinet  of  ministers.  If  the  ministers,  de- 
cide that  the  payment  should  be  made,  the  Cour  des 
Comptes  gives  its  vise,  but  with  reservation.  The  Cour 
des  Comptes  then  states'  its  motives  in  its  yearjy  report  to 
the  Chamber."  (Belgian  law  of  October  27,  1846,  Arti- 
cle 14.) 


The  Vise 
of  the 
Cour  des 
Comptes  in 
Belgium 


In  brief,  the  originality  of  the  Belgian  system  consists  in 
the  substituting  of  the  vise  by  the  Cour  des  Comptes  for  that 
of  the  Minister  of  Finance,  which  is  in  force  in  France.  Sub- 
stitution like  this,  however,  is  very  important;  the  Cour  des 
Comptes  is  an  independent  authority,  the  power  of  which  is 
eventually  doubled  by  the  power  of  the  legislature,  and  by  the 
publicity  of  its  injunctions  and  it  inspires  the  ordonnatenrs 
with  a  particularly  effective  respect.  In  a  sufficiently  large 
number  of  cases,  this  control  prevents  irregular  expenditures 
from  being  made,  because  the  ministers  restrain  themselves, 
or  because  the  cabinet  of  ministers  or  the  legislature  confirms 
the  veto  of  the  Cour  des  Comptes.  Moreover,  the  Cour  des 
Comptes,  in  order  to  avoid  a  conflict,  very  often  withdraws  its 

^  This  is  the  old  registration  en  Lit  de  Justice  with  this  profound 
difference,  that  the  Cour  des  Comptes  can  appeal  to  the  representa- 
tives of  the  country. 

508 


MEANS  OF  CONTROL  OVER  DISBURSEMENTS 

negative  on  the  promise  that  the  infraction  will  not  be  re- 
peated. Finally,  it  is  sufficient  for  the  ministers,  says  M.  Vic- 
tor Marce,  to  confront  the  solicitors  with  the  shadow  of  the 
Coiir  des  Comptes  in  order  to  protect  themselves  from  tempta- 
tions. **Although  at  times  the  control  is  an  annoyance  to  the 
ministers,  these  high  officers  avail  themselves  of  it  under  cer- 
tain circumstances  when  appeals  are  made  to  their  sympa- 
thy." This  is  an  observation  of  the  Coiir  des  Comptes  itself. 
Let  us  add,  in  this  connection,  that  the  Belgian  system  is  in 
operation  in  Holland,  Portugal,  Chili,  Japan  and  Italy. 

The  power  of  the  Cour  des  Comptes  has  been  pushed  even   ^^^^  ^our 
further  in  Italy.     Italy,  following  the  example  of  Belgium,   t\^^^y^^'' 
passes  the  control  over  the  payment  vouchers  and  disburse- 
ments to  the  Cour  des  Comptes  according  to  the  following  text : 

"Every  payment  voucher  signed  by  the  minister  or  his 
deputy  is  transmitted  to  the  Cour  des  Comptes,  which 
registers  it  and  equips  it  with  its  vise,  after  having  satis- 
fied itself  that  it  violates  no  law  and  that  the  amount  for 
which  it  calls  does  not  exceed  the  limit  of  the  respective 
appropriation."  (Law  on  public  accounting  of  February 
17,  1884.) 

In  conformity  with  this  general  rule,  the  following  article 
provides  that  "in  no  case — imder  the  strict  personal  responsi- 
bility of  the  central  treasurer  and  of  the  provincial  treasurers, 
cashiers  and  collectors — shall  any  payment  voucher  be  paid 
which  fails  to  bear  the  vise  of  the  Cour  des  Comptes."  (Arti- 
cles 46  and  57.)  Therefore,  when  the  minister  has  signed  an 
order  and  the  chief  of  the  accounting  bureau,  organized  within 
each  ministry,  has  countersigned  it,  it  is  transmitted  to  the 
Italian  Cour  des  Comptes  for  its  registration  and  vise,  pro- 
vided it  is  found  that  the  law  has  not  been  violated,  that  the 
charges  as  to  chapters  and  fiscal  periods  are  regular,  and  that 
the  appropriation  has  not  been  exceeded.  In  case  the  Cour  des 
Comptes  refuses  to  register,  on  the  score  of  insufficiency  of 
appropriations  or  from  irregularity  of  charge  against  the  chap- 
ter, the  payment  voucher  is  annulled  and  it  is  not  permitted 
to  issue  as  in  other  cases  with  the  registration  with  reservation 
{con  riscrva)}  So  far,  the  measures  have  been  analogous  to 
those  we  have  studied. 

^  Revue  politique  ct  parlementaire  of  March  10,  1896.     Article  of 
M.  Lampertico,  Senator  of  Italy. 

509 


THE  BUDGET 

To  this  control,  exercised  with  regard  to  the  payment 
vouchers,  the  Italian  Cour  des  Comptes  has  added  another, 
which  is  characteristic  and  quite  new  to  us :  All  the  royal  de- 
crees,* all  ministerial  orders,  all  governmental  acts  liable  to 
involve  the  finances  of  the  State — such  as  contracts  awarded 
to  the  highest  bidder,  mutual  agreements,  appointments  of 
officers,  granting  of  pensions,  organization  of  the  personnel — 
prior  to  their  enactment,  shall  be  communicated  to  the  Cour 
des  Comptes,  which  has  charge  of  controlling  their  conform- 
ity with  the  legislative  provisions.  Following  the  results  of 
this  examination,  the  Cour  des  Comptes  either  registers  and 
gives  its  vise  or  refuses  to  do  so.  In  the  latter  case,  which 
is  necessarily  exceptional,  the  causes  of  refusal  are  stated  in  a 
formal  opinion,  which  is  transmitted  to  the  proper  minister. 
If  the  latter  insists  upon  the  execution  of  his  decision  and  if 
the  cabinet  of  ministers,  to  whom  he  must  immediately  refer 
it,  shares  his  opinion,  the  Cour  des  Comptes  in  full  session 
of  all  its  sections  must  again  discuss  the  matter.  In  case  the 
second  opinion  of  the  Cour  des  Comptes  shall  uphold  the  first, 
it  is  nevertheless  compelled  to  register  the  act,  but  with  reser- 
vation. The  grounds  for  its  decision  are  communicated  to 
the  presidents  of  the  Senate  and  of  the  Chamber  of  Deputies 
in  order  that  the  legislature  may  pronoimce  itself,  should 
it  deem  proper,  as  to  the  responsibility  of  the  executive 
power. 

Any  matter  registered  with  reservation,  in  accordance  with 
the  law  of  August  14,  1862,  which  established  the  Cour  des 
Comptes,  was  originally  supposed  to  be  transmitted  to  the 
Chambers  about  January  of  each  year.  The  law  of  August  15, 
1867,  ruled  that  these  transmissions  should  be  made  every  fif- 
teen days,  so  as  to  shorten  the  interval  between  any  possible 


*  The  law  of  August  14,  1862,  stipulates  that  all  the  royal  decrees, 
without  distinction,  shall  be  communicated  to  the  Cour  Aes  Comptes. 
"Article  13.  All  the  royal  decrees,  regardless  of  source  and  regard- 
less of  subject,  shall  be  submitted  to  the  Cour  des  Comptes,  in  order 
that  the  latter  may  affix  its  vise  and  register  them."  The  decrees, 
however,  which  bear  upon  the  dissolution  of  municipal  councils, 
marriage  licenses,  the  granting  of  the  exequatur,  etc.,  escape  this 
formality.  It  goes  without  saying  that  the  publication  of  laws  is  not 
subject  to  a  vise  by  the  Cour  des  Comptes.  (Article  of  Senator 
Lampertico.)  The  laws  of  July  11,  1889,  and  of  June  4,  1893,  con- 
firmed the  principle  formulated  in  the  law  of  1862  in  the  following 
terms:  "The  legal  incurring  of  an  expenditure  of  any  amount  what- 
soever must  be  approved  by  the  Cour  des  Comptes" 


510 


wr 


MEANS  OF  CONTROL  OVER  DISBURSEMENTS 

infraction  and  its  control  by  the  legislature.  The  latter,  how- 
ever, now  seems  to  have  abated  in  its  enthusiasm.  M.  Lam- 
pertico  speaks  of  the  carelessness  of  the  Chamber  of  Deputies 
and  of  the  Senate  of  the  Kingdom,  with  regard  to  decrees  or 
documents  brought  to  their  attention,  which  would  otherwise 
get  stale  on  the  shelves.  It  seems  even  that,  owing  to  this 
carelessness,  the  Government  has  acquired  the  habit  of  govern- 
ing by  decrees,  although  they  are  marked  zmth  reservation, 
without  discjuieting  itself.  Legal  decrees  (decreti-legge)  were 
being  issued,  the  false  laM  of  which  voided  preventive  con- 
trol. 

These,  however,  are  all  criticisms  which  relate  to  situations 
created  under  an  autocratic  ministry,  which  has  disappeared. 
Because,  generally  speaking,  the  author  adds  that  the  acts  and 
decrees  criticized  by  the  Cour  des  Comptes  "do  not  remain  a 
dead  letter  in  the  Chambers ;  on  the  contrary,  they  often  occa- 
sion wrangling";  particularly  since  certain  outbursts  in  the 
Senate  have  reminded  the  Government  of  its  duties.  There  The  Hidden 
still  remain,  however,  the  impegni  latenti,  that  is,  disguised  Commitment 
engagements  or  contracts,  which  no  ministerial  act  reveals  and 
which  the  Cour  des  Comptes  cannot  uncover  with  its  vise,  but 
the  existence  of  which,  although  concealed,  is  certain;  these 
concealed  commitments,  once  established,  develop  so  that  in 
the  end  their  payment  by  the  public  Treasury  becomes  inevita- 
ble. In  1905,  M.  Luzzatti,  Minister  of  the  Treasury,  submit- 
ted a  bill  intended  for  the  purpose  of  combating  these  impegni 
latenti,  which  destroy  the  organization  of  preventive  control. 
These  tentative  abuses  only  confirm  the  merits  of  the  preven- 
tive control  and  its  efficiency  from  which  the  enemies  of 
economy  try  by  all  means  to  escape.^ 

^  The  preventive  system  of  control  by  the  Cour  des  Comptes  in 
Italy  has  been  shown  in  various  documents.  The  first  one  is  a  speech 
made  by  Advocate  General  Biollay,  at  the  convening-  session  of  the 
Cour  des  Comptes  on  November  2,  1882.  The  second  is  a  series  of 
reports  of  an  inspector  general  and  an  inspector  of  finances  sent  on 
special  mission  to  Italy;  extracts  from  these  reports  were  published 
in  the  Bulletin  de  statistique  of  the  ministry  of  finance  in  August, 
1888.  M.  Victor  Marce,  Councilor  at  the  Cour  des  Comptes,  pub- 
lished in  the  Annales  de  VEcole  des  Sciences  Politiques,  of  April  15, 
July  15  and  October  15,  a  very  complete  study  on  the  Italian  Cour 
des  Comptes.  The  already  cited  article  of  Senator  Lampertico  is 
based  on  a  very  scientific  work,  under  the  title  Comptabilite  d'Etat, 
by  Senator  Caspar.  Finally,  the  interesting  work  on  the  Controle 
des  Budgets,  by  M.  Emmanuel  Besson,  considers  very  much  in  detail 

5" 


TH£  BUDGET 

If,  however,  the  question  is  raised  of  introducing  into 
France  the  system  of  control  in  Italy,  the  merits  of  this  sys- 
tem have  been  contested: 

"The  final  control  of  the  action,"  it  has  been  said,  "is 
sufficient  to  prevent  the  abuse.  Well  exercised,  the  final 
control  becomes  more  eflFective  than  the  preliminary, 
which  is  always  superficial,  not  being  based  on  the  com- 
plete documents.  .  .  .  The  judicial  body,  intervening  in 
the  course  of  administrative  operations,  delays  them, 
"^Hswi'of  ^^^^^  ^^^  wheels  of  the  State  mechanism  and  interferes 

SiYsystems  generally    with    affairs.     To    avoid    these    results,  pre- 

of  Control  vcntivc  control  has  relaxed  and  everything  is  permitted 

to  pass.  .  .  .  The  Coiir  des  Comptes,  committed  by  pre- 
vious approval  of  acts  as  they  occur,  can  no  longer  judge 
the  accounts  a  posteriori  with  full  independence.  ...  A 
fundamental  principle  of  the  parliamentary  regime,  the 
responsibility  of  the  ministers  cannot  be  conciliated  with 
the  system  of  preventive  control,  etc." 

The  first  president  of  the  Cour  des  Comptes  declared  that, 
"without  bringing  to  the  actual  organization  the  dangerous 
modifications  of  preventive  control,"  it  would  be  possible  to 
give  to  the  country  the  guarantees  which  it  still  lacked.  These 
objections^  may  be  recapitulated  as  follows:  (i)  The  pre- 
ventive control  remains  superficial,  because  exercised  hastily 
it  views  separately  each  successive  fact;  it  lacks,  therefore,  a 
view  of  the  things  in  its  entirety;  (2)  in  daily  contact  with 
the  actual  facts,  the  preventive  control  exposes  the  Cour  des 
Comptes  in  an  unpleasant  way  to  the  passions  and  interests  of 
the  moment;  (3)  previous  approvals  given  in  the  course  of  the 
administrative  period  tend  to  fix  and  even  to  vitiate  the  deci- 
sions which  the  Cour  des  Comptes  might  render  later  on  a  pos- 
teriori: these  a  posteriori  decisions  will  always  form  the  most 

the  organization  of  the  Italian  Cour  des  Comptes.  The  same  is  the 
case  with  the  work  of  M.  Rene  Gervais,  former  student  of  the  Ecole 
des  Sciences  Politiques,  under  the  title  Le  controle  des  depenses 
cngagccs.  The  chapter  devoted  by  M.  Gervais  to  the  Italian  sys- 
tem is  particularly  scientific  and  useful  as  a  reference. 

^  These  objections  are  quoted  from  a  speech  of  M.  Biollay,  Advo- 
cate General  at  the  Cour  des  Comptes,  the  works  of  M.  Victor  Marce 
quoted  in  the  course  of  this  book,  from  the  speech  of  the  first  presi- 
dent of  the  Cour  des  Comptes  made  during  the  solemn  session  of 
April  2,  1896,  and  from  the  work  of  M.  Emmanuel  Besson. 

512 


MEANS  OF  CONTROL  OVER  DISBURSEMENTS 

essential  part  of  its  mission.  Besides,  the  reform  is  danger- 
ous, as  indicated  by  the  first  president  of  the  Cour  des 
CompteSj  for  the  reason  that  it  is  an  innovation,  an  unknown 
quantity. 

The  aforesaid  objections  are  based  more  on  hypothetical 
fears  than  on  invalidating  exceptions.  Because  it  would  seem 
possible  to  suppose  on  the  contrary:  (i)  That  the  preven- 
tive control  applied  to  limited  subjects,  emphasizing  very  pre- 
cise infractions  need  by  no  means  be  superficial;  (2)  that  the 
Cour  des  Comptes  should  always  remain,  owing  to  its  neutral 
position,  unscathed  by  influences,  passions,  and  interests  of  the 
moment;  (3)  that  the  control  a  posteriori  could  in  no  way  be 
vitiated  by  the  approval  of  governmental  acts,  because  this 
approval  existing  only  in  the  absence  of  the  refusal  of  a  vise,  , 

that  is  of  negative  acts,  could  not  possibly  be  binding  on  a 
definite  judgment.  These  three  counter-hypotheses  possess 
at  least  as  much  probability  as  the  original  ones. 

Furthermore,  the  question  presents  itself  in  its  totality  as   ^^^.  ^."" 
follows:     Since  the  evil  of  exceeding  appropriations  is  con-  Prevendve 
stantly    increasing,    prompt    remedies  are  necessary;  nobody   Control 
contests  this  fact.    On  the  other  hand,  preventive  control  pos- 
sesses a  recognized  superiority,   not   only   by   virtue   of    the 
maxim,  prevention  is  better  than  cure,  but  because  without 
it  the  ordonnateurs  suffer  no  repression  save  that  of  the  minis- 
terial responsibility,  which  has  proved  to  be  illusory.     An 
Italian  author,  M.  Giovanni  Gianquinto,  quoted  by  M.  Victor 
Marce,  has  said  quite  justly : 

"A  final  control  is  sufficient  for  the  accountable  agents, 
because  they  give  a  bond.  The  ministers,  however,  give 
no  bond  which  would  guarantee  the  State  reparation  for 
damages.  Therefore,  a  preventive  guarantee  is  neces- 
sary which  would  in  time  put  their  responsibility  into  op- 
eration." 

As  the  necessity  of  preventive  control   is  admitted,   who  J^^^comites 
shall  exercise  this  control?     We  have  seen  the  Minister  of   the  Best    " 
Finance  already  assuming  a  function  of  control,  with  regard   Means  of 
to  his  colleagues,  which  is  more  than  sufficient,  cdhsidering  the  ^^^^'^^^^"g 
authority  vested  in  him;  the  legislature,  on  the  other  hand, 
could  not  possibly  absorb  the  function  of  preventive  control, 
except  at  the  price  of  a  regrettable  confusion  of  powers.     As 
a  last  resort  the  Cour  des  Comptes  is  left.    Its  high  degree  of 


THE  BUDGET 


In  Italy  the 
Disbursing 
Agent  Is  the 
Intendante 
of  the 
Province 


The  Ac- 
counting 
Chiefs 


competency  needs  no  demonstration.  Its  privileged  position 
permits  it  to  dominate  the  secondary  motives  and  interested 
claims.  Being  a  board,  far  from  the  daily  life  of  the  adminis- 
trations, the  Cour  des  Comptes  remains  independent  of  the 
executive  power.  Accustomed  to  cooperate  with  the  legisla- 
ture, it  inspires  everybody  with  a  wholesome  fear.  The  ex- 
ceeding of  appropriations  always  finds  its  master  in  this  au- 
thority and  the  abuses  could  never  be  checked,  if  not  through 
this  opportune  intervention — an  intervention  which  takes  place 
before  the  evil  is  done. 

Let  us  conclude,  by  describing  briefly,  the  service  of  dis- 
bursements in  foreign  countries. 

The  Treasury  in  Italy  is  entrusted  to  the  intendante  of  each 
province,  who  centralizes  in  his  hands  all  the  financial  serv- 
ices. Instead  of  our  various  departmental  directors  and  treas- 
urers general,  Italy  has  in  each  of  its  sixty-nine  provinces 
a  single  fiscal  agent,  charged  with  directing  simultaneously  the 
excise  duties,  the  direct  taxes,  the  domains  and  other  branches 
of  fiscal  administration,  the  accounting  work,  the  treasury  and 
the  issuing  of  payment  vouchers ;  together  with  a  bureau  staff, 
including  a  chief  of  the  accounting  division  and  entire  sections 
of  officers  specialized  for  each  branch  of  financial  administra- 
tion, he  alone  represents  the  Minister  of  Finance  in  the  entire 
province.  The  payment  vouchers  delivered  by  him  are  taken 
from  a  stub  register  and  addressed  to  paying  agents,  who  are 
not  supposed  to  pass  them  out  of  their  hands,  because  every 
creditor  is  sufficiently  notified  by  a  simple  notice.  The  sys- 
tem of  having  a  stub  register  and  of  holding  the  pay-warrants 
has  the  advantage  of  removing  every  danger  of  loss  or  falsifi- 
cation, and  of  facilitating,  at  the  end  of  the  year,  the  compila- 
tion of  tables  showing  the  balances  to  be  paid.  The  National 
Bank  (Banca  Nazionale)  actually  transacts  the  operation  of 
the  Treasury  in  nearly  all  of  the  provinces  for  the  payment 
of  dues,  with  the  assistance  of  one  comptroller"  of  the  com- 
missariat attached  to  each  agency. 

At  the  top,  the  Minister  of  the  Treasury  exercises  control 
over  his  colleagues  by  virtue  of  his  authority ;  this  control  has 
already  been  spoken  of  in  Chapter  III.  "The  chiefs  of  the 
accounting  division  of  the  various  ministries  are  appointed 
upon  suggestion  of  the  Minister  of  the  Treasury  in  coop- 
eration with  the  minister  to  whom  the  service  is  subordi- 
nated." (Law  of  February  17,  1884,  Article  21.)  Moreover, 
the  Minister  of  the  Treasury  submits  these  chiefs  to  all  the 

514 


MEANS  OF  CONTROL  OVER  DISBURSEMENTS 


regulations  which  he  deems  necessary  to  issue  and  has  them 
verified  by  central  inspectors  of  the  public  accounting  author- 
ity. 'The  accountants  of  the  various  ministries  keep  their 
records  in  accordance  with  that  of  the  general  administration 
of  accounting,  and  are,  in  fact,  subordinated  to  the  supervi- 
sion of  the  director  general/'  (Law  of  February  17,  1884, 
Article  22.)  The  director  general  of  accounting  even  has  the 
power  to  summon,  if  he  deem  it  necessary,  the  chiefs  of  the 
accounting  divisions  of  the  ministries  in  order  to  demand  of 
them  information  and  statements  which  he  may  need  or  for 
the  purpose  of  giving  them  written  instructions.  (Decree  on 
Public  Accounting  of  May  4,  1885,  Article  192.)  Again,  he 
acts  as  chairman  at  their  periodical  meetings.  Because  of  the 
fact  that  these  chiefs  of  the  accounting  divisions  not  only  keep 
records  of  operations  performed,  but  also  receive  communica- 
tions with  regard  to  contracts,  agreements  and  every  other 
kind  of  act  ''from  which  result  engagements  affecting  chap- 
ters of  the  budget  or  charges  to  be  made  against  the  State'* 
(Article  196,  of  the  aforesaid  decree),  we  see  that  the  director 
general  of  accounting,  through  these  chiefs  of  accounting  divi- 
sions could  dominate  all  the  disbursing  ministries,  in  case  such 
a  supremacy  were  feasible. 

In  Prussia,  the  public  treasuries  open  only  to  the  pay-war- 
rants, properly  equipped  with  regulation  vises.  In  each  of 
the  thirty-four  districts  of  Prussia,  there  is  a  central  Treas- 
ury (Central-Kasse)  analogous  to  our  treasurerships  general, 
except  that  the  districts  are  larger  than  [the  French]  departe- 
rnents,  and  that  an  entire  category  of  expenditures  remains 
outside  of  the  scope  of  the  work  of  the  central  Treasury,  such 
as  foreign  affairs,  the  Army  and  the  Navy,  which  have  their 
special  treasuries.  The  inspectors  of  finances  in  France,  in 
their  reports,  criticized  this  complication  of  treasuries,  which 
ends  in  keeping  idle  a  fund  of  over  40,000,000  marks. 

Each  treasury  includes  three  classes  of  officers :  a  director, 
a  bookkeeper  and  a  cashier ;  the  funds  are  paid  out  only  on  the 
basis  of  payment  vouchers  bearing  the  vise  of  the  trustees  of 
the  Treasury  {curat eurs  des  caisses),  members  of  a  govern- 
mental board,  ranking  with  prefect  or  sub-prefect.  The  trus- 
tees give  their  vise  after  having  satisfied  themselves  that  the 
expenditure  involves  no  exceeding  of  appropriation,  or  falsi- 
fication. 

Everywhere,  therefore,  we  find  between  the  disbursing  min- 
ister and  the  paymaster  an  authority  which  defends  the  rights 

515 


Vouchers 
with  Fis^ 
of  Trustees 
of  the 
Treasury 


THE  BUDGET 

of  the  legislature  and  guarantees  respect  for  its  decisions.  No 
Treasury  is  left  to  the  discretion  of  the  ordonnateurs.  The 
more  effective  the  power  of  the  intermediary  authority,  which 
separates  the  ordonnateurs  from  the  Treasury,  the  more  per- 
fect the  financial  machinery  appears  to  be. 


516 


CHAPTER  XXVI 
THE  CLOSING  OF  FISCAL  PERIODS 

Fiscal  Periods  Open  Indefinitely  Prior  to  1822:  Controversy  Between 
Calonne  and  Necker;  The  Decree  of  December  22,  1790,  Divorced 
the  Old  Regime;  Measures  to  Clarify  the  Financial  Situation; 
Summary  Laws  Under  the  Restoration. 

Closing  of  the  Fiscal  Periods:  Arguments  on  the  Closing  of  the 
Fiscal  Period;  M.  Roy;  The  Ordinance  of  September  14,  1822; 
Shortening  of  the  Terms  for  Closing  Accounts;  Supplementary 
Measures;  Table  Showing  Record  of  Progress;  Five  Schedules  of 
Delay;  How  Expenditures  Are  Disbursed  Without  Appropria- 
tions; Devoted  to  General  Readjustments. 

Mechanism  of  the  Accounting  for  Closed  Fiscal  Periods:  Arrears 
from  an  Expired  Fiscal  Period;  This  Rule  Now  Amended;  The 
Law  of  Regulation  or  Approval;  Supplementary  Appropriations; 
The  Law  of  May  23,  1834. 

Quinquennial  Forfeitures:  Law  of  January  29,  1831 ;  Three  Excep- 
tions to  the  Quinquennial  Rule;  Claims  Falling  Under  Exceptions; 
Fiscal  Periods  Are  Ended. 

Closing  of  the  Budget  in  England;  Accounts  of  Balances  in  Italy; 
in  England  Unused  Appropriations  Are  Annulled ;  How  the  Transi- 
tion Is  Made;  In  Italy  Transition  Effected  Differently;  Abuses 
Under  the  System. 

Carrying  Forward  Appropriations  from  One  Fiscal  Period  to  the 
Next:  Designed  to  Prevent  Abuses. 

Before  beginning  the  last  part  [Part  IV],  which  is  devoted 
to  the  Control  of  the  Budget,  we  must  first  close  the  fiscal 
period.  We  have  now  reached  the  last  phase  of  the  fiscal 
period  with  which  this  book  opened,  and  here  important  rules 
refer  to  the  closed  fiscal  periods  and  elapsed  fiscal  periods 
{exercices  clos  and  exercices  perimes). 

Fiscal  Periods  Open  Indefinitely  Prior  to   1822 

For  a  long  time  the  fiscal  period  in  France  remained  open 
indefinitely.  Beginning  with  the  year  from  which  it  derived 
its  name,  it  continued  until  exhausted.  No  closing  date  was 
assigned  to  it.  This  conception  of  a  fiscal  period,  while  per- 
haps perfect  in  theory,  involved  in  practice  the  greatest  of 

517 


THE  BUDGET 


Controversy 
Between 
Calonne 
and  Necker 


The  Decree 

of 

December 

Z2,   1790, 

Divorced 

the  Old 

Regime 


Measures 
to  Clarify 
the 

Financial 
Situation 


abuses.  First,  the  operations  were  never  closed.  Thus, 
shortly  before  the  Revolution,  although  the  reign  of  Louis  XV 
had  lasted  for  fifty-nine  years,  the  accounting  branch  contin- 
ued to  audit  expenditures  dating  as  far  back  as  the  reign  of 
Louis  XIV.  It  is  interesting  to  pass  from  this  point  to  the 
vofuminous  discussions  between  Calonne  and  Necker.  When 
either  of  these  ministers  quoted  the  results  of  the  previous 
year,  even  those  results  which  were  certified  by  the  comptes 
au  vrai,  the  other  confronted  him  with  different  data,  which 
he  said  were  taken  from  more  exact  resources,  because  more 
recent.* 

"It  seems  quite  easy  for  a  Minister  of  Finance  to  make 
an  exact  account  of  the  annual  revenues  and  expendi- 
tures. The  confusing  of  the  various  fiscal  periods,  the 
almost  inevitable  tangle  of  the  present,  of  the  past  and 
the  future,  the  rejection  of  assignments  carried  forward 
from  one  year  to  another,  ...  all  these  causes  make  it 
extremely  difficult  to  distiguish  what  belongs  to  each 
single  year."  (Report  of  Calonne,  Comptroller  General, 
to  the  Assembly  of  Notables,  February  22,  1787.) 

Furthermore,  favorites  used  to  obtain  the  renewal  of  old 
claims  which  were  depreciated  or  which  had  lapsed,  and  which 
obliging  ministers  made  payable  indefinitely.  Necker,  in  his 
account  submitted  for  the  year  1781,  scored  the  "payments 
of  outlined  claims  acquired  at  a  vile  price,  and  their  funding 
through  loans  and  other  ways  besides.  .  .  .*' 

After  1789,  when  the  new  administration  felt  the  necessity 
of  severing  its  management  from  all  that  had  gone  before,  its 
only  chance — there  was  no  middle  ground — was  to  proceed 
to  an  extraordinary  liquidation,  which  was  ordered  by  the 
decree  of  December  22,  1790.  A  commission  was  to  examine 
each  expenditure  with  a  view  to  determining  its  date,  in  order 
to  reject  on  the  one  hand  everything  prior  to  1789,  and  on  the 
other  hand,  everything  that  matured  in  the  future.  The  de- 
cree of  April  17,  1 79 1,  completed  the  measure  by  fixing  Janu- 
ary I,  1 79 1,  as  the  definite  point  of  departure  for  the  new 
era.  "The  fiscal  period  1791,  shall  then  begin,  being  entirely 
separated  from  all  entanglements  with  the  past."  (Report  of 
Lebrun  in  the  name  of  the  committee  on  finances,  November 

^  The  history  of  the  Finances  de  Vancien  regime  et  de  la  Revolu- 
tion pive.f  the  details  of  this  famous  quarrel. 

S18 


THE  CLOSING  OF  FISCAL  PERIODS 


I5»  1790-)  These  first  liquidations,  which  apparently  were 
only  simple  matters  of  internal  accounting,  gravely  affected 
the  creditors  of  former  times,  for  whom  payment  in  assignats. 
was  stipulated.  The  law  of  August  24,  1793,  which  estab- 
lished the  great  ledger  of  the  public  debt,  went  further  still 
by  deciding  that  the  creditors  who  were  behind  with  their 
statements  should  forfeit  their  interest  by  January  i,  and  the 
principal  by  July  i,  1794.  Because  of  the  fact  that  many 
were  absent,  having  emigrated  or  been  sentenced  to  death  or 
imprisonment,  etc.,  this  forfeiture  wiped  out  the  public  debt 
in  a  summary  way.^  Further,  in  the  Year  VI  of  the  Repub- 
lic ( 1 797-1 798),  Minister  Ramel,  in  order  to  rid  himself  of 
the  arrears  of  Revolutionary  times,  by  the  law  of  the  24th 
Frimaire,  Year  VI  of  the  Republic  (December  14,  1797), 
divorced  the  old  accounting  from  the  new  and  shortly  after- 
ward, the  laws  of  the  8th  Frimaire,  Year  VII  of  the  Re- 
public (November  28,  1797),  passed  as  a  supplement  of  the 
preceding  law,  provided  that  the  holders  of  accounts  to  be 
liquidated  "should  be  compelled  to  submit  their  claims  before 
the  next  first  Germinal,  under  penalty  of  forfeiture"  The 
Consulate  broke  with  the  past  by  procedures  not  less  arbitrary, 
which  were  sanctioned  on  the  30th  Ventose,  Year  IX  of  the 
Republic  (March  21,  1801);  the  details  of  these  procedures 
are  given  in  Chapter  V.  The  forfeitures  pronounced  by  the 
laws  and  decrees  of  1808,  1809,  18 10,  also  deserve  to  be  men- 
tioned. 

The  Restoration,  feeling  once  more  the  need  for  drawing  a 
dividing  line  between  the  past  and  the  present,  officially  pro- 
nounced the  closing  of  the  fiscal  periods  prior  to  1816,  by  the 
law  of  March  25,  181 7;  this  law  directed  "the  creditors  of  the 
past  to  produce  their  claims  within  a  period  of  six  months, 
after  the  publication  of  the  law.  Once  this  period  had  elapsed, 
the  claims  would  no  longer  be  considered."  The  date  of  for- 
feiture was  extended  until  April  i,  1823,  by  the  law  of  August 
17,  1822;  and  then  until  January  i,  1832,  by  the  law  of  Janu- 
ary 29,  1 83 1.  Finally,  the  law  of  May  4,  1834,  proclaimed 
the  closing  of  the  liquidation  of  all  claims  originating  prior 
to  1 8 16.  It  was  only  on  July  i,  1834,  after  eighteen  years  that 
the  period,  fatally  prolonged,  was  closed  with  a  total  of  653,- 
000,000  francs  of  arrears  from  the  period  prior  to  18 16. 


Summary 
Laws  Under 
the 
Restoration 


*  See  the  Finances  de  Vancien  regime  et  de  la  Revolution,  Chap- 
ter XXIV. 


519 


THE  BUDGET 

So  much  trouble  and  even  abuses  and  violent  measures  ^ 
were  occasioned  periodically  by  reason  of  there  being  no  regu- 
lar closing  of  fiscal  periods  until  the  Restoration  finally  came 
to  appreciate  this  need.  This  reform  was  introduced  by  the 
ordinance  of  September  14,  1822.  In  order  to  appreciate 
properly  the  character  of  the  innovation  which  was  intro- 
duced into  our  budgetary  accounting  by  that  ordinance,  we 
must  state  that  the  preceding  arbitrary  liquidations  may  be  di- 
vided into  two  categories :  One  having  the  exclusive  purpose 
of  closing  the  internal  accounts  of  the  State;  the  other  more 
radical,  did  not  shrink  from  introducing  measures  working 
forfeitures  against  creditors  who  were  behind  with  their  state- 
ments. 

The  ordinance  of  September  14,  1822,  satisfied  only  the 
first  of  the  two  plans ;  it  dealt  with  the  closing  of  the  accounts. 
Ten  years  later,  in  1831,  the  legislature  broached  the  ques- 
tion of  forfeitures. 

Closing  of  the  Fiscal  Periods 


Arguments 
on  the 
Closing  of 
the  Fiscal 
Period 


Just  like  ''many  important  matters,  the  ordinance  of  Sep- 
tember 14,  1822,  issued  under  the  inspiration  of  de  Villele, 
had  been  preceded  by  several  unavailing  attempts.  In  1820, 
a  deputy  stated  that  five  budgets  were  open  at  the  same  time ; 
the  budgets  of  181 6,  181 7  and  181 8  were  regulated  by  legis- 
lation but  not  closed,  because  there  was  no  closing  date;  and 
besides  the  budgets  for  1819  and  1820  had  been  recently 
voted.  More  budgets  might  have  been  enumerated,  had  it 
not  been  for  the  fact  that  those  prior  to  181 6  had  been  liqui- 
dated en  bloc,  as  has  been  stated.  In  order  to  put  an  end  to 
such  confusion,-  it  was  requested :  First,  that  the  law  should 
henceforth  declare  the  closing  of  each  fiscal  period  on  Novem- 
ber I  of  its  second  year.  "This  measure,"  said  its  author, 
"will  free  us  in  the  future  from  these  hopeless  mazes  of  old 
budgets,  in  which  we  are  tangled  at  present."  (Suggestion  of 
Bignon,  Chamber  of  Deputies,  August  18,  1820.)     The  Min- 

^  Court  records,  under  the  dates  of  the  aforesaid  laws  and  decrees, 
contain  traces  of  the  grave  wrongs  suffered  by  the  interested  parties. 

2  "In  fact,  gentlemen,  as  soon  as  an  appropriation  is  made  for  a 
previous  fiscal  period,  the  ministry  can  at  will  apply  the  funds  this 
appropriation  has  made  available.  You  already  have  the  proof  that 
certain  appropriations  defrayed  expenditures  which  were  entirely 
without  relation  to  the  fiscal  period  for  which  they  were  originally 
made."     (Speech  of  M,  Bignon,  April  18,  1820.) 

520 


THE  CLOSING  OF  FISCAL  PERIODS 

ister  of  Finance,  M.  Roy,  however,  was  opposed  to  the  adop- 
tion of  this  suggestion  and  set  forth  the  following  reasons : 

"The  course  proposed  would  bring  about  a  mix-up  of  ^*  ^"^ 
all  the  fiscal  periods.  It  would  not  permit  one  to  follow 
the  facts  characteristic  of  each  and  to  verify  the  figures 
in  case  a  minister  had  exceeded  his  appropriations.  The 
facts  and  the  expenditures  of  a  fiscal  period  which  had 
expired  would  be  confused  with  the  facts  and  the  ex- 
penditures of  the  current  fiscal  period.  It  would  be  im- 
possible to  see  through  it." 

M.  Roy  ^  feared  a  very  real  danger.  It  is  a  fact  that  the 
closing  of  a  fiscal  period  throws  back  en  bloc  upon  the  cur- 
rent fiscal  period  all  the  balances  to  be  collected  or  to  be  paid ; 
this  is  likely  to  favor  abuses,  if  the  necessary  precautions  are 
not  taken;  these  precautions  consist  of  ascertaining  at  the 
proper  time  and  stopping  the  expenditures  by  a  non-varietur 
order,  so  that  they  shall  not  exceed  the  appropriations  avail- 
able for  the  closed  fiscal  period.^ 

M.  de  Villele,  however — leaving  to  experience  the  solving  The 
of  these  objections — introduced  under  the  ordinance  of  Sep-  Ordinance 
tember  14,  1822,  the  following  provisions :  September 

14,  1822 
"All  the  expenditures  of  a  fiscal  period  shall  be 
liquidated  and  vouchered  within  nine  months  after  the 
expiration  of  the  fiscal  period."  (Article  10.)  "In  case 
the  creditors  fail  to  claim  their  payments  before  De- 
cember 31,  the  payment  vouchers  issued  in  their  favor 
shall  be  annulled,  without,  prejudicing  their  rights,  how- 
ever, and  without  prejudicing  the  reissue  of  payment 
vouchers."     (Article  12.) 

The  rights  of  the  creditors,  as  we  have  indicated,  are  safe- 
guarded in  an  absolute  way.  This  measure  concerns  only  the 
internal  accounting  and  only  creditors  who  are  behind  with 

1  The  same  Count  Roy  in  1834,  as  we  shall  see,  in  his  capacity  of 
reporting  on  the  budget  to  the  Chamhre  des  Pairs,  suggested  com- 
plementary measures  necessitated  by  the  ordinance  of  1822. 

2  In  Italy  the  deficits  of  the  account  of  credit  and  debit  balances 
had  no  other  reason  for  existence.  We  shall  speak  about  them  later 
on.  In  France  actual  exceeding  of  appropriations  is  often  ascer- 
tained with  regard  to  the  expenditures  of  closed  fiscal  periods.  (See 
Report  gf  Deputy  Burdeau,  March  12,  1889.) 


THE  BUDGET 


Shortening 
of  the 
Terms  for 
Closing 
Accounts 


Supplemen- 
tary 
Measures 


their  statements  take  the  chance  of  being  delayed  in  the  secur- 
ing of  new  payment  vouchers.  The  closing  of  the  fiscal  pe- 
riod, therefore,  may  be  defined  as  follows:  "The  closing  of 
a  fiscal  period  is  an  administrative  operation  by  virtue  of 
which  the  revenues  and  the  expenditures,  after  the  expiration 
of  a  certain  term,  cease  to  be  attached  to  the  year  during 
which  they  originated." 

The  ordinance  of  September  14,  1822,  specifies  two  things 
to  be  done  at  the  closing  of  fiscal  periods :  One  relates  to  the 
liquidation  and  the  issuing  of  payment  vouchers;  the  other, 
relates  to  payments ;  these  two  are  the  more  important.  Oth- 
ers have  been  added,  however,  as  we  shall  see  later.  More- 
over, the  term  of  the  delays  has  been  gradually  reduced.  The 
creation  of  new  grounds  for  delays,  with  the  reducing  of 
their  term,  marks  the  phases  of  progress  since  1822  and  which 
have  been  consolidated  by  the  laws  of  1889  and  1899.  Let  us 
mention  rapidly  the  intermediate  dates. 

The  date  fixed  for  the  liquidation  and  the  issue  of  payment 
vouchers  was  advanced  from  September  30  to  July  31  by  the 
decree  of  August  11,  1850;  and  then  to  March  31  by  the  law 
of  January  25,  1889.  The  date  fixed  for  payment  was  ad- 
vanced in  1825  from  December  31  to  November  30,  in  1833 
to  October  31 ;  by  the  decree  of  August  11,  1850,  to  August  31 ; 
and  finally  by  the  law  of  January  25,  1889,  to  April  30.  Fur- 
thermore, the  ordinance  of  May  31,  1838,  introduced  a  new 
case  of  extension  in  order  to  "complete  within  the  limits  of 
open  appropriations  the  operations  with  regard  to  materials 
(materiel) f  on  work  begun  but  not  finished  before  the  pre- 
ceding December  31,  because  of  force  majeure  or  for  reasons 
of  public  interest" ;  this  work  can  be  continued  for  one  month 
after  the  end  of  the  year,  that  is,  until  January  31.  The  reve- 
nues as  well  as  the  expenditures  were  included  within  the 
limits  of  the  closing  of  fiscal  periods  by  virtue  of  the  ordi- 
nance of  May  31,  1838,  which  supplied  the  omission  of  the 
ordinance  of  1822. 

Finally,  the  law  of  January  25,  1889,  fixed  a  fourth  and  a 
fifth  category  in  the  closing  of  the  fiscal  period,  for  June  30 
and  July  31  of  the  second  year,  in  order  to  authorize  the  sup- 
plementary appropriations  and  to  complete  certain  interior 
operations,  as  will  be  explained  later. 

The  provisions  of  the  law  of  January  25,  1889,  were  re- 
produced verbatim  in  the  law  of  February  25,  1899,  except 
for  certain  corrections  with  regard  to  the  schedule  of  closing 

522 


THE  CLOSING  OF  FISCAL  PERIODS 

on  July  31.^     The  following  table  presents  the  summary  of 
these  successive  phases : 


Table  Showing  Record  of  Progress 


Laws  and  Decrees 


Ordinance  of  Sept.  14.  1822 

Ordinance  of  Aug.  31,  1825 

Ordinance  of  July  11, 1833 

Decree  of  Aug.  11 ,  1850 

Decrees  of  May  31,  1838  and  1862 
889  and  Feb. 


Laws  of  Jan.  25 
25,  1899 


Dates  of  Closing  of 


Comple- 
tion of 
Works 


Feb.  I 
Jan.  31 


Passing  of 
Payment 
Vouchers 
(Ordon- 

nancetnenls) 


Sept.  30 


July  31 


March  31 


Payments 


Dec.  31. 
Nov.  30 
Oct  31 
Aug.  31 

April  30 


Collec- 
tions 


Aug.  31 
April  30 


Supple- 
mentary 
Appropri- 
ations 


June  30 


Changes 

of 

Charges, 

Transfers, 

Regulari- 

zations, 

etc. 


Nov.  30 
July  31 


The  law  of  February  25,  1899,  which  now  regulates  the 
matters  in  question,  recognizes  definitely  five  schedules  of  de- 
lay in  the  closing  of  the  fiscal  periods:  January  31  of  the 
second  year,  for  the  purpose  of  completing  works  under  way ; 
March  31,  for  the  liquidating  and  passing  of  payment  vouch- 
ers covering  expenditures;  April  30,  for  collections  and  pay- 
ments; June  30,  for  the  authorization  and  regularization  of 
certain  expenditures  by  means  of  supplementary  appropria- 
tions; July  31,  for  rectification  of  the  records.  The  first  three 
— relating  to  works  under  way,  the  passing  of  payment  vouch- 
ers, and  to  payments — are,  as  we  see,  brought  close  to  the  end  Five 
of  the  year ;  here  lies  the  chief  reform  introduced  by  the  laws  Schedules 
of  1889  and  1899,  and  which  would  require  long  explanations,  ^  ^  ^^ 
if  it  were  not  for  the  fact  that  Chapter  V  has  already  exten- 
sively treated  the  question  of  the  complementary  period.  The 
delays  have  l^een  reduced  a^  far  as  possible;  therefore,  if 
abuses  still  remain,  the  fault  is  inherent  in  the  system  itself. 

The  last  two  schedules  mentioned  in  the  law  of  1889  have 
a  peculiar  and  complicated  character.  The  question  arises  in 
the  fourth  case,  as  to  the  purpose  of  the  supplementary  appro- 

^The  law  of  July  13,  191 1,  established  for  the  expenditures  of 
annexed  budgets  (budgets  annexes)  a  special  complementary  delay 
extended  until  July  31  of  the  second  year  of  the  fiscal  period;  it 
seems  useless  to  insert  this  delay  in  the  table  hereinafter  given. 


THE  BUDGET 


How  Ex- 
penditures 
Are 

Disbursed 
Without 
Appropria- 
tions 


Devoted  to 
General 
Readjust- 
ments 


priations  authorized  from  April  30  to  June  30,  when  one  is 
no  longer  permitted  to  issue  payment  vouchers  or  to  pay  any- 
thing. To  what  kind  of  expenditures  do  these  posthumous 
authorizations  apply?  They  apply  to  expenditures  already 
disbursed  without  appropriations,  as  the  commentaries  ex- 
pressly state.  They  are  nothing  but  regularizations,  made 
beforehand,  because  the  committing  of  infractions  is  antici- 
pated. The  estimating  is  limited  to  "expenditures  concerning 
charges  made  obligatory  by  the  fiscal  law  and  the  amount  of 
which  can  be  known  only  after  the  execution  of  the  operation." 
This  means,  that  only  estimated  appropriations  (credits  eval- 
uatifs)  come  into  consideration  exclusively  in  this  connection. 
Finally,  the  law  takes  cognizance  of  the  probability  of  the  ap- 
propriations being  exceeded,  when  in  the  eyes  of  the  law  there 
should  be  no  such  probability.  The  preliminary  reports 
drafted  by  the  commissions  on  budget^  give  long  explana- 
tions on  this  subject;  we  therefore  refer  the  reader  to  these, 
as  well  as  to  the  work  written  by  M.  Victor  Marce.^ 

The  fifth  case  carries  its  pages  open  until  July  31  of  the 
second  year,  in  order  to  enable  the  Administration  to  correct 
errors  in  the  charges,  to  make  restorations  of  appropriations 
from  one  ministry  to  another,  to  carry  out  rectifications  of 
various  sort,  which  are  involved  in  the  current  operations  of 
the  fiscal  period,  etc.  Chevrey-Rameau,  Director  General  of 
Public  Accounting,  said :  "There  is  a  period  during  which 
the  administration  collects  itself  and  makes  an  examination  of 
its  conscience  before  presenting  itself  before  its  judges.  This 
is  the  moment  when  all  erroneous  charges  are  regularized." 
(Session  of  the  Senate  of  November  14,  1887.)  ^ 


.  ^  Report  of  Deputy   George   Cochery,   December  28,    1888. 

2  "Notice  sur  la  lot  dii  25  Janvier  i88p  relative  a  Vcxcrcice  finan- 
cier," by  Victor  Marce.  Extract  from  the  Annuaire  de  legislation 
frangaise. 

3  The  speech  of  Chevrey-Rameau,  in  1887,  deserves  to  be  cited 
more  extensively.  Although  the  dates  indicated  by  him  have  been 
changed  by  the  law  of  1889,  his  illuminating  remarks  illustrate  the 
mechanism  of  the  operations  of  closed  fiscal  periods.  "The  distin- 
guished previous  speaker  vi^ill  undoubtedly  permit  me  to  ask  him 
what  he  understands  by  the  closing  of  the  fiscal  period.  The  closing 
of  a  fiscal  period  is  an  incomplete  designation.  I  myself  am  familiar 
with  a  large  number  of  such  closings  of  the  fiscal  period  and,  although 
I  do  not  want  to  make  a  show  of  my  erudition,  I  will  have  to  ask 
you  to  permit  me  to  enumerate  them.  There  is  a  first  closing  of 
the  fiscal  period — and  this  one  is  the  most  important  in  my  eyes; 
this  is  the  closing  of  the  fiscal  period  on  December  31  of  the  year 


524 


THE  CLOSING  OF  FISCAL  PERIODS 

As  soon  as  this  last  work  of  rectification  is  completed,  the 
fiscal  period  is  definitely  closed  for  all  interested  parties,  ex- 
cept for  the  cases  of  carrying  forward  (continuation)  of  ap- 
propriations relating  to  the  completion  of  programs,  industrial 
operations,  etc.,  recently  approved  by  the  law  of  February  27, 
fgi2. 

« 
Mechanism  of  the  Accounting  for  Closed  Fiscal 

Periods 

The  ordinance  of  September  14,  1822,  declared  on  the  sub- 
ject of  the  mechanism  of  closed  fiscal  periods : 

"If  among  the  expenditures  made  in  one  fiscal  period, 
there  were  some  which  cannot  be  liquidated  or  paid  be- 
fore the  date  of  the  closing  of  the  account,  they  shall  be 
paid  only  by  virtue  of  royal  ordinance  authorizing  the 
charging  of  these  expenditures  against  the  current  fiscal 
period.'*     (Article  21.) 

The  balances  of  expired  fiscal  periods,  therefore,  shall  be 
charged  against  the  current  fiscal  period.     This  rule  still  re- 
mains in  force.    The  ordinance  of  September  14,  1822,  how- 
ever, issued  this  rule  without  reenforcing  it  with  precautionary  Arrears 
measures,  without  determining,  for  example,  the  limit  of  ap-   ^^^"}  ^" 
propriations  within  which  these  belated  charges  should  be  kept,   pfscaT 
thus  leaving  to  the  ministers  the  liberty  of  charging  against  Period 
the  current  fiscal  period  any  arrears  which  they  deemed  proper 
to  assign  to  this  current  fiscal  period.    Here  lay  the  realization 

which  gives  the  name  to  the  fiscal  period.  After  this  date  no  further 
expenditures  for  the  closed  fiscal  period  can  be  incurred.  There  is 
a  second  closing  of  the  fiscal  period  on  January  31,  for  continuing, 
within  the  limit  of  open  appropriations,  the  expenditures  for  mate- 
rials. On  July  15  there  is  another  closing  of  the  fiscal  period  for 
the  secondary  ordonnateurs  of  expenditures.  On  July  31  there  is 
again  a  closing  of  the  fiscal  period  for  the  main  ordonnateurs.  On 
August  20  there  is  again  the  closing  of  the  fiscal  period  for  the 
subordinated  accountable  officers;  on  August  31  for  the  main  ac- 
countable officers.  Finally  on  November  30  there  is  a  definite  clos- 
ing of  the  operations.  From  August  31,  the  date  on  which  the  last 
payments  may  be  made,  to  November  30  there  is  a  period  during 
which,  if  I  may  be  permitted  this  expression,  the  administration  col- 
lects itself  and  makes  an  examination  of  its  conscience  before  pre- 
senting itself  before  its  judges.  This  is  the  moment  when  all  the 
erroneous  charges  are  regularized.  .  .  ."  (Senate,  November  14, 
1887.) 


THE  BUDGET 

of  the  fears  expressed  in  1820  by  M.  Roy;  disorder  and  con- 
fusion indeed  resulted  from  this  measure,  as  is  stated  by  the 
drafters  of  the  law  of  1834:^ 


This  Rule 

Now 

Amended 


The  Law  of 
Regulation 
or  Approval 


"Through  a  grave  abuse,  payments  have  been  made^ 
by  various  ministries  without  legislative  appropriation, 
which  have  amounted  4;o  12,000,000  out  of  23,000,000  of 
back  payments.  The  ministers  deemed  themselves  au- 
thorized to  pay  for  these  operations,  even  for  those  which 
exceeded  the  original  appropriations,  and  without  obtain- 
ing supplementary  appropriations  for  the  purpose." 
(Speech  of  M.  de  Mosbourg,  Deputy,  April  24,  1834.) 

The  remedy  for  the  evil  consists  in  paying  no  account  for 
a  closed  fiscal  period  without  a  previous  legislative  appropria- 
tion. The  law  of  May  23,  1834,^  states  that  at  the  end  of  the 
fiscal  period — when  it  is  no  longer  permitted  to  liquidate  an 
account,  to  pass  or  to  pay  payment  vouchers — the  appropria- 
tions relating  to  belated  claims  shall  be  annulled,  that  is  they 
shall  temporarily  lose  their  identity  in  the  public  treasuries. 
It  becomes  necessary,  therefore,  to  provide  these  claims  with 
new  appropriations  in  order  to  h^ve  the  ministers  reissue  pay- 
ment vouchers ;  the  words  without  prejudice  to  the  rights  of 
the  creditors  of  the  State  dominate  the  entire  matter.  For 
this  purpose,  a  list  of  debts  still  to  be  paid,  made  out  at  the 
time  of  the  closing  of  the  fiscal  period,  is  inserted  in  the  law 
of  regulation  of  the  accounts  of  the  fiscal  period.  This  law 
then  undertakes  to  make  the  appropriations  necessary  for  the 
payment  of  these  outstanding  debts.  It  is  by  virtue  of  this 
new  authorization,  the  law  of  regulation,  and  within  its  limits 
only,  that  the  ministers  can  reissue  payment  vouchers. 

*  "According  to  the  general  account  of  finances  for  1833,  out  of 
24,454,442  francs  of  debts  which  had  to  be  paid  after  the  closing  of 
the  different  fiscal  periods,  still  unaffected  by  the  statute  of  limita- 
tion, there  was  an  amount  of  12,065,599  francs  relating  to  debts 
which  were  ascertained  only  after  the  fiscal  period  was  already 
closed,  and  which,  therefore,  were  not  subjected  to  the  control  of 
the  chambers,  when  the  submitting  of  the  law  on  accounts  has 
intrusted  the  chambers  with  comparing  the  expenditures  disbursed 
with  the  appropriations  made  and  with  publishing  by  their  votes 
the  results  of  this  comparison."  (Report  of  M.  Calmon  in  the  name 
of  the  commission  on  budget.    Chamber  of  Deputies,  April  18,  1834.) 

2  An  ordinance  of  October  12,  1833,  had  previously  issued  analogous 
provisions  which,  however,  were  not  deemed  sufficiently  explicit  by 
the  Chamber, 

526 


THE  CLOSING  OF  FISCAL  PERIODS 

As  the  law  of  regulation  is  always  passed  very  late,  it  has 
been  admitted  that  even  before  it  is  voted,  the  simple  insert- 
ing of  lists  of  balances  to  be  paid  in  the  bill  would  be  suffi- 
cient to  authorize  the  ministers  to  proceed  with  their  issuing 
of  payment  vouchers.  The  decree  of  May  31,  1862,  stipu- 
lated: 

"Article  125.  The  expenditures  which  the  accounts 
show  still  remain  to  be  paid  at  the  time  of  the  closing  of 
the  fiscal  period  and  which  were  authorized  by  regular 
appropriations,  may  be  vouchered  by  the  ministers  against 
funds  of  the  current  budgets,  before  the  law  of  regula- 
tion of  the  fiscal  period  has  been  voted."  The  law  of 
regulation  then  makes  sacrosanct  appropriations  by  means 
of  the  following  formula:  "The  payments  to  be  made 
for  the  purpose  of  balancing  the  expenditures  of  the 
budget  of  the  fiscal  period  .  .  .  shall  be  vouchered 
against  the  funds  of  current  fiscal  periods.'* 

As  far  as  claims  which  do  not  form  part  of  the  list  of 
balances  to  be  paid  are  concerned,  they  become  payable  only  Supplemen- 
by  virtue  of  supplementary  appropriations  voted  by  the  cham-  o^iationa^"" 
bers.  The  law  of  May  2^,  1834,  stipulated:  "In  case  claims 
duly  fixed  against  a  closed  fiscal  period  are  not  included  in  the 
balances  to  be  paid,  which  are  determined  by  the  law  of  regu- 
lation, they  can  be  provided  for  only  by  means  of  supplemen- 
tary appropriations."      (Article  99.)^     These  supplementary 

^  "It  is  necessary  that  this  law  should  contain  the  authorization 
to  pay  for  all  the  debts  ascertained  in  the  law  on  accounts  until  the 
date  of  the  forfeiture  of  the  claims.  As  far  as  the  debts  which  were 
ascertained  only  after  the  balancing  of  the  fiscal  period  are  con- 
cerned, a  supplementary  appropriation  alone  can  give  to  the  expendi- 
ture the  necessary  legality.  These  are  the  bases  of  the  system:  No 
payment  is  made  on  the  debits  of  closed  fiscal  periods  without  an 
authorization  by  the  legislature,  which  is  given  either  by  a  law  regu- 
lating the  accounts  or  by  a  law  granting  supplementary  appropria- 
tions."    (Report  of  Deputy  Calmon,  April  18,  1834.) 

Henceforth  the  ministers  shall  include  the  payment  vouchers  to 
be  issued  for  the  current  fiscal  period  and  with  regard  to  the  closed 
fiscal  periods  within  the  limit  of  appropriations  made  by  the  law  of 
regulation  for  the  expenditures  remaining  to  be  made  after  the 
closing  of  the  fiscal  period.  Beyond  this,  supplementary  appropria- 
tions shall  become  necessary.  These  provisions  are  the  result  of 
previously  voted  laws.  They  contain  measures  of  order,  the  advan- 
tages of  which  are  obvious."  (Report  of  Count  Roy,  in  the  Chambre 
des  Pairs,  May  17,  1834.) 

527  / 


pnations 


THE  BUDGET 

appropriations,  in  accordance  with  the  law  of  March  30,  1902, 
must  be  presented  in  a  separate  plan.  In  brief,  all  appropria- 
tions for  closed  fiscal  periods,  no  matter  what  their  origin^ 
are  made  by  law.  If  by  special  indulgence  the  appropriations 
forming  a  part  of  the  balances  to  be  paid  (restes  a  payer)  are 
temporarily  available,^  the  law  of  regulation  does  not  fail  to 
sanction  them  subsequently.  A  special  chapter  of  the  budget 
for  the  current  fiscal  period,  for  each  ministry,  is  charged  with 
the  payment  vouchers  for  the  expenditures  of  closed  fiscal 
periods.  This  chapter,  under  the  title  expenditures  for  closed 
fiscal  periods,  contains  no  definite  figures  of  an  appropriation ; 
it  is  open  only  as  a  memorandum  (pour  memoire).^ 
The  Law  The  law  of  May  23,  1834,  recapitulates  what  we  have  just 

"The  ministers  are  supposed  to  keep  the  payment 
vouchers  for  the  current  fiscal  period,  in  consideration  of 
the  closed  fiscal  periods,  within  the  limits  of  appropria- 
tions per  chapter  as  annulled  by  the  laws  or  regulations, 
for  the  sake  of  the  expenditures  remaining  to  be  paid  at 
the  close  of  the  fiscal  period.  These  payment  vouchers 
are  charged  against  the  special  chapter,  opened  as  a  mem- 
orandum and  a  routine  matter  in  the  budget  of  each  min- 
istry without  special  allotment  of  funds.  The  total  of 
payments  made  during  the  course  of  each  year,  for  the 
closed  fiscal  periods,  is  credited  to  the  chapter  in  question 
aild  included  among  the  legislative  appropriations  at  the 
time  of  the  regulation  of  the  fiscal  period." 

^  The  list  of  balances  to  be  paid  {Vetat  dcs  restes  d  payer)  is  sub- 
mitted because  of  its  importance,  to  verification  by  the  comptrollers  of 
incurred  expenditures.     (Law  of  July  13,  191 1.) 

2  Calmon,  in  1834,  thus  explained  the  reason  of  the  existence  of 
this  formula  memorandum:  "In  fact,  if  the  funds  necessary  for  pay- 
ment of  belated  expenditures  were  added  to  the  current  budget, -there 
evidently  would  be  useless  repetition.  The  expenditures  of  the 
chapter  for  closed  fiscal  periods  shall  be  paid  by  means  of  funds 
which  remain  available  from  the  operations  of  preceding  budgets. 
Every  fiscal  period  hands  down  a  portion  of  its  expenditures  to 
the  following  fiscal  periods,  together  with  corresponding  resources. 
.  .  .  The  special  chapter,  opened  with  the  legend,  a  memorandum 
(pour  memoire),  is  an  expedient  of  accounting  rather  than  an  ele- 
ment of  the  budget."     (Report  of  April  18,  1834.) 


:  X.       528 


i83i 


THE  CLOSING  OF  FISCAL  PERIODS 

Quinquennial  Forfeitures 

The  administrative  closing  of  the  fiscal  period,  as  we  have 
said,  leaves  intact  the  rights  of  the  creditors  of  the  State.  As 
long  as  the  ordinance  of  September  14,  1822,  alone  regulated 
the  question,  the  creditors  of  the  State  could  submit  their 
claims  and  demand  liquidation,  the  issuing  of  payment  vouch- 
ers and  payment,  if  not  indefinitely  at  least  within  the  limits 
provided  by  the  common  law  and  contained  in  the  Civil  Code. 
The  Administration  thus  remained  for  ten,  twenty,  even  thirty 
years  exposed  to  the  danger  of  unforeseen  claims,  without 
being  able  to  proceed  in  proper  time  to  a  definite  auditing  of 
expired  fiscal  periods.  The  progress  of  ideas  has  recognized 
that  it  would  be  better  to  create  a  regular  system  of  limitation  Law  of 
for  the  benefit  of  the  Treasury  than  to  continue  the  system  Ij""^""-^  ^9' 
of  arbitrary  liquidations  spoken  of  in  Chapter  V;  this  was 
realized  by  the  law  of  January  29,  1831,  which  read: 

"Article  9.  All  claims  shall  be  put  under  the  statute 
of  limitations  and  definitely  cancelled  for  the  benefit  of 
the  State,  .  .  .  which — not  having  been  paid  before  the 
closing  of  the  appropriations  of  the  fiscal  period  to  which 
they  belong — could  not,  through  lack  of  sufficient  proof, 
be  liquidated  and  paid  within  a  period  of  five  years,  be- 
ginning with  the  opening  of  the  fiscal  period.  This  limit 
applies  to  creditors  residing  in  Europe,  and  a  period  of 
six  years  to  all  others."  (Article  126  of  the  decree  of 
regulation  of  May  31,  1862.) 

According  to  these  provisions,  every  unpaid  expenditure  at 
the  end  of  five  years,  counted  from  the  beginning  of  the  fiscal 
period,  is  automatically  canceled.  This  constitutes,  as  we 
have  said,  a  special  statute  of  limitation  ^  for  the  benefit  of 
the  State. 

The  law  of  January  20,  1831,  however,  adds:    "Article  10. 

The  provisions  of  the  preceding  articles  shall  not  apply  to 

claims,  the  payment  of  which  could  not  be  effected  by  action 

of  the  Administration  or  by  an  appeal  to  the  Conseil  d'Etat." 

'  The  State,  in  fact,  cannot  declare  the  creditors  barred,  if  the 

^  This  special  limitation  of  five  years,  applicable  by  virtue  of  the 
law  of  183 1  to  all  the  debts  of  the  State,  should  not  be  confused 
with  the  quinquennial  limitation  of  bond  coupons,  which  was  estab- 
lished by  Article  2,277  of  the  Civil  Code. 

529  ,      . 


THE  BUDGET 


Three 
Exceptions 
to  the 
Quinquen- 
nial Rule 


Claims 
Falling 
Under 
Exceptions 


Fiscal 
Periods 
Are  Ended 


delay  on  the  part  of  the  creditors  results  from  an  action  of 
the  State.  There  are  three  exceptions  to  the  quinquennial 
rule:  (i )  That  of  creditors  residing  outside  of  Europe,  which 
prolongs  the  statute  one  year;  (2)  the  fault  of  the  Administra- 
tion; (3)  an  appeal  to  the  Conseil  d'Etat. 

The  fiscal  period,  arrived  at  the  limit  of  its  fifth  year,  dis- 
appears from  the  accounting.  "The  fiscal  period,  arrived  at 
the  limit  of  forfeiture,  is  no  longer  carried  in  the  accounting 
of  the  ministries,"  says  Article  134  of  the  decree  of  May  31, 
1862.  Each  year  a  fiscal  period  is  thus  definitely  ended.  On 
January  i,  1908,  the  fiscal  period  of  1903  was  canceled  from 
the  accounting  records.  On  January  i,  1909,  the  same  was 
the  case  with  the  fiscal  period  of  1904.  On  January  i,  19 15,  the 
fiscal  period  of  19 10  was  closed.  Thus,  in  succession,  on 
fixed  dates,  all  the  fiscal  periods  pass  from  the  official  port- 
folio into  the  archives  of  history. 

Claims,  subsequently  approved  by  virtue  of  one  of  the 
three  exceptions  classified  above,  go  under  the  name  of  claims 
for  elapsed  fiscal  periods  (creances  d'exercices  p crimes),  and 
are  paid  from  appropriations  made  as  a  memorandum  {pour 
memoire)  in  a  chapter  of  the  current  budget  of  each  ministry, 
which  chapter  is  headed :  Expenditures  for  elapsed  fiscal  pe- 
riods not  affected  by  limitations  (Depenses  des  exercices  peri- 
mes  non  f rappees  de  declicance)}  Special  laws,  in  accord- 
ance with  Article  yy  of  the  law  of  March  30,  1902,  determine 
their  figures  which  are  substituted  in  the  course  of  the  fiscal 
period  for  the  heading,  a  memorandum  (pour  memoire).^ 

The  fiscal  periods  are  terminated  in  France  in  two  ways: 
( I )  Within  the  Administration  on  April  30,  June  30,  or  July 
31,  of  their  second  year,  with  the  reissue  of  the  payment; 
vouchers  on  the  closed  fiscal  period  of  unpaid  claims.  In  this 
connection,  the  claims  of  the  creditors  are  respected  and  up- 
held. (2)  By  virtue  of  quinquennial  forfeitures  of  all  old 
claims,  save  a  few  exceptions,  admitted  as  expenditures  of 
elapsed  fiscal  periods.  In  this  way  the  claims  of  creditors  are 
definitely  annulled. 


*  The  budget  of  every  ministry  ends  with  the  following  two 
chapters : 

Expenditures  of  elapsed  fiscal  periods  not  affected  by  limitations — 
Memorandum. 

Expenditures  of  closed  fiscal  periods — Idem. 

2  For  details  consult  the  Traite  de  V extinction  des  dettes  de  VEtat 
par  la  decheance  quinquennalc ,  by  M.  George  Tabareau, 

530 


THE  CLOSING  OF  FISCAL  PERIODS 

Closing  of  the  Budget  in  England;  Accounts  of 
Balances  in  Italy 

In  England,  where  the  accounts  are  regulated  by  annual   in  England, 
administrative  periods  and  not  by  fiscal  periods,  the  closing   ^j-opHations 
of  the  operations  at  the  end  of  the  fiscal  year  is  very  simply   Are 
done.     All  the  appropriations  not  used  are  annulled.     "The   Annulled 
appropriations  can  only  be  used  for  payments  in  the  course 
of  the  fiscal  year,"  says  Sir  Stafford  Northcote  in  an  article  in 
the  Dictionnaire  de  la  Politique,  previously  mentioned.      A 
new  vote  for  the  following  year  revives  the  appropriations  for 
unpaid  claims,  in  case  it  is  necessary.^    In  England,  therefore, 
the  accounting  of  closed  fiscal  periods  is  unknown.     As  soon   How  the 
as  a  fiscal  year  is  ended,  in  the  evening  of  March  31,  the  op-  T^^^^^^°" 
erations  of  that  fiscal  year  are  not  prolonged  under  any  form. 
The  new  year,  which  opens  on  April  i,  includes,,  without  dis- 
tinction as  to  origin,  all  payments  disbursed  from  its  first  to 
its  last  day.     Certain  adjustments,  however,  mitigate  the  ef- 
fects of  a  sudden  stopping  of  the  accounts.     We  have  seen 
that  the  Bank  of  England  opens  a  special  account  for  the 
paymaster  general.     When  the  end .  of  the  fiscal  year  is  ap- 
proaching, this  account  receives,  by  legal  authorization  of  the 
comptroller  and  auditor  general  and  of  the  Bureau  of  the 
Treasury^  an  allotment   of    from    50,000,000   to    55,000,000 
francs.    This  sum  is  to  be  used  during  three  months  to  cover 
the  expenditures  of  the  expired  fiscal  year,  in  case  these  have 
been  vouchered  prior  to  April  i.     The  account  of  the  Ex- 
chequer,  closed   irrevocably  on   the  evening  of   March  31, 
leaves  among  the  assets  of  the  special  account  of  the  paymaster 
general  a  balance  which  is  sufficient  to  liquidate  officially  the 
arrears. 

Italy,  where  the  system  of  accounting  by  administrative 
periods  also  prevails,  has  solved  the  difficulties  of  the  transi- 
tion period  somewhat  differently.    In  theory,  when  consulting 
only  the  text  of  the  regulations,  the  Italian  system  appears   l"  it^Jy 
to  be  beyond  criticism.    The  system  seems,  in  any  case,  to  be   Effected*'" 
scientifically  articulated,  as  we  shall  see.    The  annual  admin-  Differently 
, , 

^  Until  1862  the  civil  services  could  report  their  unused  appropria- 
tions at  the  end  of  the  year.  Neither  the  civil  services  nor  the 
ministry  of  war,  nor  of  the  navy,  can  do  this  any  longer,  except 
when,  in  the  beginning  of  work  to  be  continued,  a  rough  estimate 
of  their  total  cost  has  been  voted.  The  work  continues  from  year 
to  year  within  the  limits  of  this  rough  estimate. 


THE  BUDGET 

istrative  period  in  Italy,  from  July  i  until  June  30,  includes 
not  only,  as  in  England,  the  operations  of  the  Treasury,  but 
also  the  droits  constates  during  this  period,  as  has  been  ex- 
plained in  Chapter  V.  As  soon,  therefore,  as  accounting 
begins  to  absorb  a  portion  of  the  droits  constates  not  as  yet 
collected  or  paid,  it  is  necessary  that  the  actual  fact  of  these 
collections  or  of  these  payments  be  followed  in  a  routine  ac- 
count. Hence,  there  results  the  opening  of  accounts  of  debit 
and  credit  balances  (comptes  des  reliquats  actifs  et  passifs) 
created  outside  of  the  budget.  "The  revenues  ascertained  but 
not  collected,  the  expenditures  ascertained,  liquidated  and 
vouchered  but  unpaid,  constitute  the  credit  and  debit  balances 
of  the  fiscal  period,'*  says  Article  171  of  the  decree  of  May  4, 
1885.^  The  form  of  these  accounts  is  apparently  quite  regu- 
lar.^ The  voucher ing  of  expenditures  is  subjected  in  these 
accounts  to  the  same  rules  as  obtain  through  the  fiscal  period 
and  is  subject,  like  the  expenditures  of  the  current  fiscal  pe- 
riod, to  a  vise  of  the  Cour  des  Compfes,  which  controls  the 
documentary  evidence  and  the  regularity  of  budgetary  appro- 
priations.^ 

*  According  to  the  text  of  the  law  of  July  17,  1889,  not  only  the 
ascertained  expenditures  {depenses  constatees),  but  even  the  incurred 
expenditures  (depenses  engagees)  seem  to  be  a  part  of  the  fiscal  year 
in  Italy.  "The  appropriations  relating  to  the  ordinary  expenditures 
of  the  budget  and  not  used  by  the  end  of  the  year  shall  be  annulled. 
There  shall  be  considered  as  being  used  all  the  amounts  which  the 
State  has  obligated  itself  to  pay,  either  by  virtue  of  contracts  or  for 
works  or  supplies,  which  shall  be  carried  out  or  furnished  in  the 
course  of  the  fiscal  period." 

2  The  account  of  the  balances  forms  a  distinct  account  from  that 
of  revenues  and  of  expenditures  belonging  to  the  current  fiscal  period ; 
this  is  the  case  to  such  an  extent  that  no  expenditure  relating  to 
the  balances  to  be  paid  can  be  charged  against  the  appropriations 
of  the  current  fiscal  period,  and  vice  versa.  (Article  32  of  the  law 
of  February  17,  1884.) 

M.  Cerboni,  Director  General  of  State  Accounting  in  Italy,  wrote 
as  follows,  in  1885 :  "In  Italy,  the  fiscal  period  consists  essentially  of 
the  simple  ascertaining  of  the  droits  to  the  credit,  and  debit  of  the 
Treasury,  without  neglecting,  however,  the  results  of  funds,  ...  in 
such  a  way  that,  after  having  closed  the  administrative  period  of 
the  Treasury  on  June  30  of  each  year,  the  balances  are  carried 
forward  to  the  accounts  of  the  coming  year  just  as  is  the  case  with 
the  simple  credits  and  debits  of  the  Treasury." 

3  The  expenditures  thus  carried  forward  to  the  account  of  bal- 
ances can  be  liquidated  and  paid,  beginning  with  July,  without  wait- 
ing for  the  vote  of  the  legislature  which  approves  them  in  the  definite 
general  account.     (Article  59  of  the  law  of  February  17,  1884.) 


THE  CLOSING  OF  FISCAL  PERIODS 

Nevertheless,  abuses  originated  and  developed  to  an  extent  Abuses 
which  temporarily  discredited  the  system.^  The  more  or  less  system *^^ 
regular  interpretation  of  Article  310  of  the  decree  of  1885 
made  it  possible  to  consider  certain  expenditures  as  incurred, 
the  amounts  of  which  had  not  as  yet  been  determined  (liqui- 
dated) ;  and,  as  a  result  thereof  they  were  liable  to  be  included 
in  the  account  of  the  balances.  Under  cover  of  this,  the  minis- 
ters changed  the  figures  of  balances  which  were  originally 
ascertained,  rectified  the  liquidations  and  proceeded  to  strike 
other  balances  supposed  to  be  more  exact.  As  M.  Magliani, 
Minister  of  Finance,  wrote  on  February  2,  1888:  The  debts 
of  the  State  entered  among  the  balances  "should  not  techni- 
cally speaking  undergo  any  change."  Immediately,  however, 
the  minister  added  that  this  idea  had  not  been  respected  and 
that  the  exigencies  of  administrative  experience  did  not  cease 
to  require  exceptions.  Miscalculations,  particularly  in  matters  ' 
of  puIdHc  works,  exhausting  and  exceeding  appropriations,  were 
for  a  long  time  concealed  in  the  bosom  of  balances.  "In  prac- 
tice," said  he,  "the  account  of  balances  has  not  always  been 
kept  with  equal  care  by  the  several  ministerial  departments." 
For  the  decennial  period,  1877- 1887,  appropriations  were  ex- 
ceeded by  104,500,000  francs.  The  annual  average,  however, 
decreased  as  the  end  of  the  period  was  reached.  In  1885- 
1886  there  was  an  excess  of  only  7,363,000  francs;  and  in 
1 886- 1 887  of  only  1,867,000  francs.  The  evil  has  disappeared 
by  degrees,  and  since  certain  reforms  were  introduced  by  the. 
law  of  July  17,  1889,  the  gaps  in  previous  regulations  now 
appear  to  have  been  filled.  It  is  to  be  hoped  that  the  abuses 
of  former  times  will  not  recur.  Should  such  be  the  case,  the 
Italian  system  will  still  preserve  the  precious  advantage  of 
promptness  in  producing  accounts  almost  as  complete  as  ours, 
which  are  rendered  very  tardily. 

Carrying    Forward    Appropriations    from    One    Fiscal 
Period  to  the  Next 

The  annuality  of  budgets,  proclaimed  in  Chapter  XV,  has  a 
necessary  consequence  in  the  annulment  of  appropriations  not 
used  up  until  the  end  of  the  fiscal  period ;  the  rules  of  annul- 
ments were  presented  in  that  chapter.  These  two  measures 
are  correlated ;  one  engenders  the  other.     However,  we  have 

^  Statistical  bulletin  of  the  ministry  of  finance,  issue  of  August 
1888,  extract  from  a  report  on  Italian  accounting. 

533 


THE  BUDGET 

already  seen  how  the  mechanism  of  closed  fiscal  periods  per- 
mits the  carrying  forward  to  following  fiscal  periods  of  ap- 
propriations relating  to  expenditures  incurred,  but  not  vouch- 
ered  nor  paid  on  the  closing  date.  This  carrying  forward, 
however,  only  tends  to  protect  the  claims  of  the  creditors  of 
the  State.  The  same  is  the  case  with  the  important  innovation 
inaugurated  by  Article  71  of  the  law  of  February  27,  1912, 
which  reads  as  follows : 

"Each  year  a  special  law  shall  carry  forward  to  the  cur- 
rent fiscal  period — with  the  same  distribution  equalizing 
the  annulments  which  said  law  shall  determine  for  the 
preceding  fiscal  period — the  appropriations  relating  to: 
(i)  The  carrying  out  of  programs  concerning  national 
defense;  (2)  the  supplying  as  well  as  the  establishing  of 
industrial  services  of  the  State;  (3)  the  continuation  of 
works  controlled  by  contract  or  which  will  expressly  ap- 
pear in  the  budgets." 

Designed  The  pretext  for  these  new  measures  is  primarily  to  combat 

Abuse J*^"*  the  inveterate  abuses  of  administrations,  which,  at  any  cost, 
exhaust  the  total  of  their  appropriations  by  the  end  of  the 
fiscal  period.  Henceforth,  instead  of  their  taking  over  with 
them  the  balances  of  appropriations,  they  will  be  given  to 
them  the  following  year,  after  they  have  been  carried  forward. 
Undoubtedly  the  legislature  will  remain  indefinitely  the  only 
distributor  of  appropriations  carried  forward,  as  well  as  of  all 
others.  Is  it  not  likely,  however,  that  a  dangerous  obscurity 
may  soon  shroud  the  accounting  of  these  allotments,  which 
are  thus  carried  from  year  to  year  and  superimposed  on  those 
of  the  current  fiscal  period  ? 


(^ 


534 


PART   IV 
CONTROL  OF  THE   BUDGET 


CHAPTER  XXVII 
NECESSITY  OF  CONTROL 

Revolutions  Due  to  Lack  of  Control :  The  Work  of  Vuitry ;  The  Rule 
of  the  Financiers;  De  Marigny  Was  Hanged;  La  Guette;  Remy, 
Montaigu  and  Des  Essarts  Executed;  Jacques  Cceur,  Semblanqay 
and  Fouquet;  The  Court  of  Justice  of  1716;  A  Chamber  of  Justice 
in  1721 ;  The  End  of  the  Tax  Farmers. 

Ordonnateurs  and  Accountable  Officers:  The  Functions  of  These 
Contrasted;  Three  Classes  of  Control. 

Administrative  Control  Over  the  Ordonnateurs. 

Administrative  Control  Over  the  Accountable  Officers:  The  Ac- 
countable Officers'  Report;  The  Books  of. the  Accountable  Officers. 

Double  Entry  Accounting:  Double  Entry  Bookkeeping;  The  Place  of 
Single  Entry;  Double  Entry  Accounting  Means  Security;  Leon 
Say's  Fanciful  Picture;  Possibility  of  Fraud;  Some  Illustrations. 

Judicial  Control   Over  the   Ordonnateurs. 

Judicial  Control  Over  the  Accountable  Officers:  The  Accountable 
Officer  Must  Render  Statements;  These  Statements  Are  Examined. 

The  control  of  public  revenues  and  expenditures  has  been 
exercised  at  various  times  in  our  history  under  very  different 
conditions,  varying  with  the  degrees  of  financial  prosperity 
of  the  country;  the  control  discloses  and  at  the  same  time 
serves  to  augment  financial  prosperity,  and  therefore  may  be 
taken  as  its  index  as  well  as  a  cause. 

Revolutions  Due  to  Lack  of  Control 

No  control  was  in  existence  in  those  early  times  (primitive 
from  the  financial  point  of  view)  at  the  close  of  the  feudal 
monarchy  of  which  Chapter  II  of  this  book  took  account. 
The  conscientious  work  of  Adolphe  Vuitry  ^  on  the  financial 

^  Etudes  su'r  le  regime  financier  de  la  France,  2  vols.,  1883. 

535 


THE  BUDGET 

administration  of  Philip  the  Fair  and  of  the  first  Valois,  dis- 
closes but  few  of  the  rudimentary  elements  of  accounting. 
The  Work  *'At  the  time  of  the  accession  of  Philip  the  Fair,  there  was 
«  uitry  j^Q  administration  of  finances,  or  at  least  it  was  confused  with 
the  general  administration  of  the  country."  Under  the  suc- 
cessors of  Philip  the  Fair  certain  progress  was  made.  Biit 
after  arriving  at  the  end  of  his  work,  in  the  year  1380,  under 
Charles  V,  Vuitry  declares  in  brief,  that  "the  confusion  and 
trouble  which  reigned,  in  the  operations  of  the  Treasury,  re- 
sulted not  from  an  insufficiency  of  resources  but  from  an 
inadequate  procedure,  and  from  rules  followed  in  the  admin- 
istration of  public  wealth  and  in  the  handling  of  the  royal 
funds." 

The  Rule  of  the  "Financiers" :  This  lack  of  control  in- 
volved long-standing  evils.  Financiers  appropriated  to  them- 
selves without  restraint  the  spoils  of  the  nation,  and  used  for 
their  own  profit  the  funds  intended  for  the  Treasury ;  the  only 
restraint  lay  in  the  fact  that  when  their  plundering  exceeded 
the  measure  of  tolerance  they  were  hanged.  It  was  a  sum- 
mary procedure  of  control  a  posteriori,  in  those  early  times. 
This  statement  is  not  exaggerated.^  The  ministerial  chronol- 
ogy of  the  early  superintendents  of  finance  {surintendants  des 
finances)  confirms  it. 
DeMarigny  Enguerrand  de  Marigny  (from  1301  to  1315),  after  the 
ly^s  death  of  his  protector,  Philip  the  Fair,  was  arrested  in  the 

^"^^  Louvre,  imprisoned  in  the  Temple    and    from    there    trans- 

ferred in  chains  to  Vincennes.  He  was  accused  of  having 
counterfeited  money,  of  having  overwhelmed  the  people  with 
taxes,  of  having  extorted  rich  gifts,  through  a  ruse,  from  the 
late  King,  of  having  stolen  40,000  ecus  intended  for  the  Pope, 
of  having  cut  down  forests,  of  having  accepted  bribes,  of 
having  permitted  the  preparations  for  the  last  war  against  the 
Flemish  to  fail,  etc.  .  .  .  Convicted  ^  of  all  these  crimes  by 

^  "Under  the  kings,  when  the  ministers  of  finance  did  not  succeed, 
the  procedure  with  them  was  very  simple.  They  were  either  be- 
headed or  exiled.  From  Enguerrand  de  Marigny  to  Necker  there 
were  thirty-seven  ministers  broken  on  the  wheel,  hanged,  beheaded 
or  exiled  because  they  ceased  to  please.  Nowadays,  the  ministers  of 
finance  get  off  much  easier."  (Speech  of  the  senator  in  charge  of 
the  general  report  on  the  budget  for  1890.     Senate,  July  11,  1889.) 

2  Many  historians  see  in  the  sentencing  of  Enguerrand  de  Marigny 
the  result  of  a  political  grudge.  None  of  these  historians,  however, 
would  consent  to  guarantee  the  integrity  of  Enguerrand  de  Marigny. 


NECESSITY  OE  CONTROL 


an  assembly  composed  of  princes,  peers  of  the  realm,  barons, 
prelates,  etc.,  he  was  condemned  to  death  by  hanging.  On 
April  30,  13 1 5,  on  the  eve  of  the  feast  of  the  Ascension,  before 
daybreak,  the  sentence  was  carried  out  and  his  body  was 
carried  to  Montfaiicon. 

The  second  on  the  list  is  La  Guette  (from  13 16  to  1322),  La  Guette 
who  was  accused — after  the  death  of  Philip  V,  called  "the 
Long''  by  the  latter's  successor,  Charles  IV,  ''the  Handsome" 
— of  having  embezzled  1,200,000  lizrcs  from  the  Treasury 
(more  than  30,000,000  in  our  present  money).  He  was  put 
in  prison  and  examined  on  the  wooden  horse.  The  ordeal  was 
so  great  that  he  died  a  few  days  later. 

The  third  one,  Pierre  Remy  (from  1322  to  1328),  accused 
of  stealing  funds  belonging  to  the  king  and  to  the  nation,  con- 
fessed when  put  on  the  wooden  horse.  He  was  executed  on 
April  25,  1328,  and  his  body  hung  on  the  gallows  at  Mont- 
faucon,  which  he  had  ordered  repaired  some  time  before. 
Later,  Montaigu  (from  1381  to  1409)  was  accused  of  em- 
bezzlement. The  commissaries,  appointed  as  his  judges,  made 
him  admit  his  guilt  with  regard  to  the  question  at  issue.  His 
head  was  cut  off  with  an  ax  on  October  17,  1409. 

Pierre  des  Essarts  (from  1410  to  1412)  was  tried  by  the 
Parlcmcnt.  His  head  was  cut  off  in  the  Halles  on  July  i, 
1 41 3.  Pierre  de  Gyac  (in  1425),  under  Charles  VII,  was 
arrested  in  bed  at  Issoudun,  and,  in  January,  1426,  under  sen- 
tence of  the  court,  was  strangled  and  thrown  into  the  river. 

We  have  not  exaggerated  when  saying  that  nearly  all  of  the 
early  superintendents  of  finance  were  either  hanged,  beheaded 
or  drowned.^  These  acts  of  violence  continued.  In  1450, 
Jacques  Cceur,  in  spite  of  his  former  services,  Was  accused  of 
peculation  and  deprived  of  his  castles,  farms,  galleys,  mer- 


1 


Pierre  Clement,  in  a  notice  which  he  devotes,  with  his  customary 
erudition,  to  Enguerrand  de  Marigny,  seems  disposed  to  exculpate 
him.  He  also  gives  details  as  to  the  figures  of  his  wealth,  "the  great- 
est and  largest  which  a  private  individual  has  ever  amassed  in 
France,"  which  aroused  great  doubts  as  to  its  origin.  Adolphe 
Vuitry  limits  himself  to  saying:  "Enguerrand  de  Marigny  was  the 
victim  of  hatred  and  a  political  grudge.  The  other  two,  Gerard  de 
la  Guette  and  Pierre  Remy,  were  probably  more  guilty  of  peculation 
and  malpractices." 

1  The  accountable  officers  of  our  day  when  thinking  about  this 
prefer  the  overscrupulous  verifications  by  the  inspection  of  finances, 
the  annoyances  on  the  part  of  their  superiors  and  the  injunctions 
of  the  Cour  dcs  Comptcs  to  these  procedures  of  the  middle  ages. 


537 


THE  BUDGET 


Jacques 
Coeur, 

Semblangay, 
and  Fouquet 


chant-ships,  furniture,  silverware,  etc.  The  death  penalty  im- 
posed upon  him  was  commuted  to  life  imprisonment.  Under 
Francis  I,  de  Semblangay,  an  old  man  whom  the  King  used  to 
call  father,  aroused  suspicion^  and  was  hanged  in  1522.^ 

Everybody  knows  of  the  prominence,  the  luxury  and  finally 
of  the  trial  of  Fouquet,  which  was  held  before  a  commission 
of  twenty-two  members,  the  charge  against  him  being  perjury. 
A  decision  was  rendered  only  after  three  years.  "Praise  God, 
and  thank  Him,  our  poor  friend  has  been  saved,**  wrote 
Madame  de  Sevigne;  "I  am  so  relieved  that  I  am  beside  my- 
self." In  fact,  in  spite  of  the  pressure  on  the  part  of  the 
King,  Fouquet  was  not  condemned  to  death,  but  for  nineteen 
years,  until  the  end  of  his  life,  he  was  confined  in  the  fortress 
of  Pignerol.^ 


1  Pierre  Clement  devotes  himself  to  the  task  of  exculpating  Beaune 
de  Semblanqay.  "Nothing  proves,"  he  said,  "that  Beaune  de  Sem- 
blanqay  was  guilty  of  acts  of  ascertained  malpractice  which  would 
be  manifest  because  the  decisions  of  the  two  commissions  by  which 
he  was  tried  have  no  moral  value."  Beaune  de  Semblanqay  while 
in  office  also  acquired  a  considerable  fortune,  and  if  his  condemna- 
tion can  be  considered  in  the  first  place  as  the  result  of  revenge  on 
the  part  of  the  Duchess  d'Angouleme  and  of  the  jealousy  of  Chan- 
cellor Du  Prat,  the  charges  of  peculation  brought  forth  against  him 
can  hardly  be  refuted. 

2  At  the  end  of  the  sixteenth  century,  Sully  set  forth  in  his 
Memoires,  the  embezzlements  of  the  financiers:  "In  these  times  of 
confusion,  the  royal  funds  were  the  prey  of  the  one  who  grabbed 
them  first.  The  revenues  of  the  king  were  not  sufficient  for  the 
avidity  of  the  financiers  which  ordinarily  grew  through  public  suffer- 
ing. I  had  great  troubles  in  unravelling  the  mysteries  of  the  people 
of  this  profession.  I  discovered  all  the  secret  sources  of  the  collec- 
tors. There  were  a  large  number;  forgeries  of  pretended  uncollect- 
able  debts,  expenses  for  carriages,  spices,  etc.;  all  these  were  so 
many  resources  used  for  the  profit  of  the  clerks  who  absorbed  a 
portion  of  the  revenues.  .  .  .  The  contractors  (fermiers)  and  the 
Treasurers  of  France  realized  almost  twice  as  much  as  the  sum  for 
which  the  contract  was  given  to  them." 

3  Petit  jean.  Attorney  General  of  the  Cour  des  Comptes,  in  a  speech 
at  the  opening  session  of  November  3,  1876,  dealt  specially  with  the 
extraordinary  tribunal  of  1661  which  had  charge  of  trying  Fouquet. 
In  his  speech  Petitjean  quotes  the  terms  of  the  edict  constituting 
the  tribunal  in  question  which  declared,  "that  the  king  wanted  to 
strengthen  his  government  by  a  repression  of  abuses  committed  in 
the  finances.  A  certain  number  of  individuals  have  during  the  last 
few  years  used  illegitimate  means  in  order  to  amass  quick  and  pro- 
digious fortunes.  .  .  ."  Petitjean  furthermore  adds:  "The  frauds  of 
Fouquet  cannot  be  denied.  Under  a  government  which  announced 
its  firm  intention  to  reestablish  order  in  the  finances,  similar  mal- 

538 


NECESSITY  OF  CONTROL 


Later,  in  critical  times,  the  courts  of  justice  and  torture  The  Court 


chambers  undertook  the  task  of  auditing  the  accounts.  The 
most  celebrated  court  of  justice,  convened  in  1716,^  after  the 
death  of  Louis  XIV.  It  summoned  the  financiers  who  had 
grown  rich,  in  order  to  inform  itself  as  to  the  extent  and  the 
sources  of  their  wealth ;  it  encouraged  denunciations  by  prom- 
ising a  portion  of  the  plunder  to  the  informers,  thus  intro- 
ducing treason  in  the  midst  of  families.  These  rank  inquisi- 
tions uncovered  2i9,cxx),ooo  of  illicit  profits.  Unfortunately, 
out  of  the  4,410  individuals  who  were  fined,  the  majority 
escaped  having  to  pay  owing  to  the  intervention  of  courtiers. 
The  trials  developed  opportunities  for  bargaining  between 
those  who  needed  protection  and  those  who  could  sell  it. 

After  the  failure  of  Law,  a  new  court  of  justice,  organized 
by  the  decree  of  January  16,  1721,  examined  all  the  securities 
put  in  circulation  during  the  Law  regime.  This  vise — in- 
tended to  afifect  individuals  rather  than  the  accountable  officers 
— reached  2,452,000,000  of  livres  belonging  to  511,000  own- 
ers; only  1,700,793,294  livres  were  approved.  This  was  a 
reduction  of  more  than  700,000,000,  which  had  accrued  from 
an  extraordinary  issue  of  187,893,661  livres,  based  on  the  no- 
torious Mississippi  securities. 

Thus,  until  the  middle  of  the  eighteenth  century,  violent, 
arbitrary  and  intermittent  procedures  took  the  place  of  a  per- 
manent and  regular  control,  which  was  lacking  at  the  time 
evil  conditions  reached  their  high  mark.     The  last  example 


of  Justice 
9f  1716 


A  Chamber 
of  Justice 
in  1721 


practices  necessitated  severe  punishment,  if  for  nothing  else,  at  least 
for  the  sake  of  an  example. 

The  interesting  details  given  by  Cheruel  in  his  work,  Memoires 
sur  la  vie  puhlique  et  privce  de  Foiiquet,  on  the  trial  of  the  Super- 
intendent, confirm  the  opinion  just  quoted;  the  erudite  author,  how-, 
ever,  did  not  deem  it  necessary  to  draw  personal  conclusions  as  to 
the  subject  of  the  guilt  of  Fouquet.  This  guilt,  as  far  as  the  embezzle- 
ment is  concerned,  is  shown  more  explicitly  by  the  works  of  two 
jurists  who,  after  having  criticized  the  form  of  the  trial,  agreed  on 
the  statement  that  after  all  the  charges  preferred  against  Fouquet 
were  justified.  (Speeches  at  the  opening  conference  of  attorneys  at 
law,  one  made  in  Paris  by  M.  Leon  Deroy,  on  November  27,  1882, 
and  the  other  in  Marseilles  by  M.  Pijotat,  January  7,  1882.) 

1  The  chambers  of  justice  were  in  operation  long  before  1716.  An 
edict  of  June,  1625,  even  expressly  ordered  that  regularly  every  ten 
years  there  should  be  established  a  chamber  of  justice  "in  order  that 
the  malpractices  of  officers  and  people  engaged  in  the  business  of 
the  collection,  handling  and  distribution  of  public  funds  shall  not  go 
unpimished." 


539 


Farmers 


THE  BUDGET 

of  this  can  be  found  during  the  Revolution.  The  verification 
of  the  accounts  of  thirty-two  tax  farmers,  suspended  for  a 
long  while  because  of  lack  of  judges,  was  taken  up  by  the 
Convention,  which  transmitted  the  documents  of  the  case  to 
its  committee  on  general  safety,  on  accounts  and' on  finances 
The  End  of  Combined  in  one.  From  the  midst  of  this  body,  an  individual 
Jj'e  Tax  Yv^as  selected  to  ^  recapitulate  the  charges  directed  against  the 
accountable  officers,  charges  bearing  on  the  finances — such  as 
tricks  used  in  the  calculation  of  the  details  of  revenues  and 
expenditures,  inexact  valuation  of  the  results  of  previous  fiscal 
periods,  unjustified  expenditures,  belated  paying  in  of  funds 
to  the  Treasury,  rate  of  taxation  calculated  at  ten  per  cent  in- 
stead of  six  or  four  per  cent,  etc.  While  only  the  questions 
of  weighing  the  exactness  of  masses  of  figures  and  the  diffi- 
cult problems  of  accounting  were  involved,  the  committee  of 
the  Convention  suggested  that  the  tax  farmers  be  sent  before 
the  criminal  revolutionary  tribunal,  which  the  assembly  ac- 
cepted without  objection.  The  tribunal — upon  the  accusation 
of  Fouquier-Tinville,  without  stopping  to  hear  the  statements 
of  the  defendants  or  the  defense  of  their  attorneys — declared 
them  individually  and  collectively  guilty  of  malpractices,  for- 
geries of  records,  unlawful  profits,  embezzlements  of  funds, 
etc.  As  soon  as  the  sentence  of  death  was  passed  upon  them, 
they  mounted  the  scafifold,  twenty-eight  of  them,  on  the  same 
day  at  five  o'clock  in  the  afternoon  (May  8,  1794).  Their 
stewardships  were  thus  audited.^ 

^  Report  on  the  administration  of  the  contractors  general  {Fer- 
micrs  Gcneraux)  by  Dupin,  i6th  Floreal,  year  II  of  the  Republic 
[May  5,  1794]. 

2  Among  the  contractors  general  who  were  led  to  the  scaffold  was 
the  celebrated  Lavoisier,  to  whom  is  devoted  the  remarkable  work 
by  M.  Edward  Grimaux  {Lavoisier,  1^4^-1794,  Paris,  1888).  M. 
Edward  Grimaux  relates,  with  regard  to  Lavoisier,  the  entire  trial 
of  the  contractors  general.  He  says :  "The  prosecutor  did  not  charge 
the  defendant  with  any  lack  of  patriotism.  With  what  right  did  he 
insist  upon  sending  the  defendants  before  a  tribunal  expressly  organ- 
ized for  the  purpose  of  punishing  crimes  of  a  counter-revolutionary 
character?"  Later  on  M.  Grimaux  analyzes  the  text  of  the  sentence 
passed  by  the.  revolutionary  tribunal  as  follows:  "What  article  of 
the  law  could  have  been  invoked  against  the  contractors  general? 
For  what  reason  could  condemnation  be  demanded?  The  cunning 
genius  of  Coffinhal,  former  prosecutor  of  the  Chatelet,  supplemented 
the  silence  of  the  law  by  the  form  of  questions  asked  the  jury:  Has 
there  been  in  existence  a  conspiracy  against  the  people  of  France 
which  has  tended  to  favor  by  all  possible  means  the  enemies  of  the 


NECESSITY  OF  CONTROL 

These  frightful  examples  ^  show  quite  clearly  the  necessity 
of  control,  by  means  of  which  abuses  can  be  prevented,  the 
guilty  punished  in  time  and  honest  agents  kept  in  security. 
It  was,  however,  only  at  the  beginning  of  the  nineteenth  cen- 
tury that  the  control,  in  France,  acquired  a  sound  and  reassur- 
ing organization. 

Ordonnatcurs  and  Accountable  OMcers:    In  the  first  place, 
over  what  agents  does  the  control  extend?     All  agents  co- 
operating in  the  execution  of  the  budget — the  ordonnatcurs 
and  the  accountable  officers — are  compelled  to  prove  that  they 
have  faithfully  fulfilled  their  duties.    The  nature  and  the  rigor 
of  the  justifications  demanded  of  each  of  these  categories  of 
agents  ^  differ  to  a  great  extent  because  of  the  dissimilarities 
of  their  respective  functions,  which  are  as  follows :     ( i )  The 
accountable  officers  keep  their  accounts  by  administrative  pe-  xhe 
riods  and  the  ordonnatcurs  by  fiscal  periods.     The  Treasury   Functions 
operations  of  the  accountable  officers,   conducted  wholly  in   com^'Td 
chronological  order,  are  in  balance  at  all  times  and  are  liable 
to  be  definitely  closed  without  subsequent  addition.     There- 
fore, at  the  end  of  the  year  the  books  of  the  accountable  offi- 
cers are  irrevocably  closed.     The  ordonnatcurs,  not  entering 


country:  by  committing  all  kinds  of  extortions  and  peculations  upon 
the  people  of  France,  by  adding  water  to  tobacco,  as  well  as  other 
ingredients  detrimental  to  the  health  of  the  citizens;  by  taking  six 
and  10  per  cent,  while  the  law  only  permits  4  per  cent;  by  keeping 
in  their  hands  the  funds  which  should  have  been  turned  over  to  the 
National  Treasury,  in  order  to  keep  away  from  the  nation  the  im- 
mense sums  necessary  for  conducting  the  war  against  the  despots 
marching  against  the  Republic,  and  to  supply  them  with  these  funds?" 

'Thus,  Coffinhal  was  infamous  enough  to  accuse  the  contractors 
general,  without  proof,  of  complicity  with  the  enemy,  that  is,  of  a 
crime  which  deserves  the  death  penalty  .  .  .  because  interest  col- 
lected abusively  prior  to  1789  had  deprived  the  nation  of  the  sums 
necessary  for  the  war  of  1794." 

^  "The  people  applauded  noisily  when  the  twenty-eight  heads 
dropped,  just  as,  in  former  times,  around  the  scaffold  of  Montfaucon, 
the  mob  yelled  abusing  the  treasurers  of  France  hanging  on  the 
scaffold.  It  is  a  long  story."  {Les  Fermiers  gencraux,  by  Cape- 
figure.) 

-The  decree  of  May  31,  1862,  gives  the  following  definition  of  the 
ordonnateurs  and  the  accountable  officers:  "The  administrators  and 
the  ordonnatcurs  have  charge  of  establishing  and  collecting  the  rev- 
enues and  proceeds  {droits  et  prodiiits),  as  well  as  of  the  Hquidation 
and  the  vouchering  of  expenditures.  The  accountable  officers  who 
are  responsible  are  put  in  charge  of  making  the  collections  and  pay- 
ments."    (Article  14.) 


541 


THE  BUDGET 

their  operations  from  day  to  day,  as  the  accountable  officers 
do,  could  not  possibly  comply  with  an  abrupt  closing  on  De- 
cember 31.  On  the  contrary,  their  moral  responsibility  must 
follow  every  item  of  expenditure  and  assemble  its  scattered 
parts,  even  beyond  the  end  of  the  year.  Other  analogous 
motives  cause  the  personality  of  the  ordonnateur  to  disappear 
in  his  accounts.  He  himself  always  remains  unknown.  The 
accountable  officer,  on  the  contrary,  sees  his  name  on  letters 
and  on  the  labels  of  his  accounting  memoranda;  he  is  the 
holder  of,  and  is  responsible  for,  the  funds  of  his  treasury; 
his  personality  is  always  conspicuous;  (2)  the  accountable 
officer,  therefore,  must  have  his  accounting  work  audited.  His 
real  estate  carries  a  mortgage,  and  his  property  both  movable 
and  immovable  is  also  subjected  to  an  attachment,  which  gives 
special  rights  to  the  Treasury.^  A  portion  of  his  wealth  is 
deposited  in  the  treasuries  of  the  State  as  a  bond.  He  must, 
therefore,  obtain  a  release  in  full  (quitus)  through  an  audit, 
in  order  to  recover  the  title  to  his  property.  Nothing  of  the 
kind  is  in  existence  with  regard  to  the  ordonnateur.  No 
mortgage  for  the  benefit  of  the  Treasury  encumbers  his  prop- 
erty ;  he  deposits  no  bond ;  -  no  material  lien  ties  him  to  his 


^  The  State,  by  virtue  of  Article  2121  of  the  Civil  Code,  has  a 
legal  mortgage  on  the  properties  of  the  accountable  officers.  Fur- 
thermore Article  2098  gives  to  the  State  a  lien  on  the  movable  and 
immovable  property  of  the  accountable  officers  which  is  specially 
regulated  by  the  law  of  September  5,  1807. 

2  A  certain  number  of  administrators,  ordonnateurs  and  chiefs  of 
service  other  than  the  accountable  officers  are  required  in  various 
countries  to  furnish  a  bond.  In  France  this  measure  was  practiced 
extensively  in  former  times.  It  still  applies  to  the  departmental 
directors  of  registration  and  domains,  the  departmental  directors  of 
indirect  taxes,  to  the  inspectors  of  the  same  service,  to  the  directors, 
inspectors  and  deputy  inspectors  of  customs,  etc. 

The  question  may  arise,  why  this  measure  is  not  a  general  one. 
Is  it  logical  that 'officers,  either  chiefs  of  the  service  or  the  ordon- 
nateurs, who  by  one  stroke  of  the  pen,  by  a  simple  signature,  pledge 
the  finances  of  the  State  and  open  the  treasuries  of  the  accountable 
officers,  should  not  be,  like  the  latter,  subjected  to  the  obligation  of 
depositing  bonds?  Hereinafter  are  given  the  reasons  justifying  the 
difference  in  treatment  existing  between  the  chiefs  of  a  service,  the 
administrators  or  ordonnateurs  and  the  accountants.  In  the  first 
place,  the  accountable  officers,  being  exposed  to  material  losses,  theft 
of  money  or  mistakes  in  accounts,  must  already  from  this  point  of 
view  and  abstracted  entirely  from  the  question  of  honesty,  guarantee 
by  the  deposit  'of  a  bond  the  integrity  of  their  collections.  Further- 
more, as  the  sight  of  the  precious  metal  arouses  dangerous  cupidity, 


NECESSITY  OF  CONTROL 

post.  When  he  goes  back  to  private  life  on  short  notice,  with 
no  formality,  in  spite  of  the  millions  of  expenditures  which 
were  vouchered  by  him,  he  recovers,  or  better,  he  preserves  his 
complete  independence.  In  a  word,  his  person  is  involved  in 
a  few  exceptional  cases  only,  when  vague  principles  of  re- 
sponsibility contained  in  the  laws  are  brought  against  him, 
on  account  of  ascertained  facts.^  Otherwise,  as  his  responsi- 
bility has  not  been  involved,  it  needs  no  release. 

Let  us,  therefore,  treat  separately  these  dissimilar  cases  by  ^^"^ 
studying  successively,  the  controls  to  which  the  ordonnateurs  comrol  ° 
and  the  accountable  officers  are  subjected  from  the  administra- 
tive, judicial,  and  legislative  points  of  view,  following  the 
customary  distinctions  made  by  the  law  books :  administrative 
control  exercised  by  the  superiors  over  their  subordinates, 
judicial  control  exercised  by  the  Coiir  des  Comptes  and  legis- 
lative control  exercised  by  the  legislature. 

the  bond  is  a  guarantee  to  the  Treasury  against  temptations  and 
possible  dishonesty. 

So  far  as  the  administrators  and  the  ordonnateurs  are  concerned, 
they  could  not  be  robbed  very  well  and  they  can  commit  no  material 
errors  which  would  involve  losses  of  money;  furthermore,  their 
honesty  is  not  tempted  by  the  daily  handling  of  the  tempting  gold. 

On  the  other  hand,  if  bonds  were  demanded  of  all  officers  liable 
for  public  funds,  what  agent  of  the  State  could  be  exempted?  First, 
the  ministers  standing  at  the  top  of  the  service  ladder  would  have 
to  guarantee  by  considerable  deposits  the  honest  management  of  the 
billions  of  which  they  dispose.  Descending  the  ladder  to  the  inferior 
officers,  we  shall  see  that  a  portion  of  the  public  wealth,  more  or  less 
important,  is  entrusted  to  their  hands.  Thus  the  bonding  would 
become  universal. 

This  last  argument  was  by  no  means  less  important  than  the  pre- 
ceding one  in  order  to  induce  the  various  Governments  to  limit  almost 
exclusively  the  obligation  of  depositing  the  bond  to  the  accountable 
officers. 

1  "As  long  as  the  responsibility  of  the  ordonnateurs  is  not  specially 
involved,  he  has  no  judge  to  pass  upon  him  unless  public  opinion 
by  which  everybody  may  be  judged  should  undertake  this  function. 
In  the  discharging  of  his  duties,  he  preserves  the  full  and  free  dis- 
posal of  his  fortune.  His  integrity  and  his  abilities  are  the  only 
securities  he  gives  to  public  confidence.  And  when  he  goes  back  to 
private  life  he  has  no  formality  to  perform  in  order  to  enjoy  the 
plenitude  of  his  rest."  (Report  of  Marquis  de  Gamier  on  the  bill 
of  regulating  the  fiscal  period  1815,  1816  and  1817.  Chambre  des 
Pairs,  June  17,  1819.) 


543 


THE  BUDGET 


Administrative  Control  Over  the  Ordonnateurs 

As  the  ministers  are  the  ordonnateurs,  there  is,  summarily 
speaking,  no  administrative  control,  because  they  are  supreme 
in  their  respective  administrations.  If,  however,  in  the  serv- 
ice sense  of  the  word  the  ordonnateurs  are  not  controlled  in 
the  execution  of  the  budget,  it  may  be  remembered  that  the 
Minister  of  Finance  has  supervision  over  them  in  the  matter 
of  the  incurring  of  expenditures,  and  then  through  the  vise 
of  the  vouchers,  which  alone  makes  them  payable.  This  is 
unquestionably  a  control,  although  disguised,  intermittent  and 
limited  to  certain  points  only. 

The  secondary  ordonnateurs,  subordinated  to  the  principal 
ordonnateurs,  are  controlled  by  the  latter  in  conformity  with 
Articles  296-305  of  the  decree  of  May  31,  1862.  This  con- 
trol consists  in  their  being  compelled  periodically  to  submit 
summaries  and  reports  on  the  situation  to  their  superiors. 
These  superiors,  however,  who  sign  payment  vouchers  and 
delegated  payment  vouchers,  escape  in  the  end  all  administra- 
tive control. 

Administrative  Control  Over  the  Accountable 
Officers 

The  administrative  control  over  the  accountable  officers,  on 
the  contrary,  is  universal  and  unceasing.  "The  administrative 
control  is  exercised  hierarchically,  in  the  course  of  the  execu- 
tion of  the  budget  over  all  holders  of  public  funds,  through 
requiring  periodical  statements  and  by  means  of  examina- 
tions on  the  spot." 
The  The  accountable  officers  prepare  first,  every  ten  days  or 

A^ountable    every  month,  statements  of  condition,  memoranda  for  the  pur- 
Repor?  pose  of  keeping  their  superiors  posted  on  the.  course  of  col- 

lections and  payments,  memoranda  on  balances  of  accounts 
and  on  the  movements  of  funds,  etc.,  striking  a  comparison 
between  the  operations  of  one  year  or  one  month  with  another, 
laying  special  stress  on  delinquencies  or  prepayments  and  add- 
ing substantiating  comments.  At  the  time  of  their  periodical 
turning  over  of  funds,  they  submit  memoranda — -accompanied 
by  documents  substantiating  their  collections,  their  expendi- 
tures, payment  vouchers,  receipted  pay-warrants  (mandats 
acquittes),  stub  registers,  counterfoils  of  endorsed  receipts, 

54,4 


NECESSITY  OF  CONTROL 

etc. — either  to  the  main  collector's  office  or  to  the  special  col- 
lector's office  or  to  the  treasurer  general's  office,  according  to 
whether  the  submitting  agents  are  under  the  financial  excise 
administrations  (regies  financieres)  or  are  the  direct  account- 
able officers  of  the  Treasury.  The  superior  agents  submit 
the  same  kinds  of  documents  to  the  ministry  of  finance. 

In  the  second  place,  on  more  or  less  unexpected  dates  the   The  Books 
hierarchical  superiors  enter  the  offices  of  the  accountable  offi-   Ac«?ountabl« 
cers  in  order  to  ascertain  what  funds  and  securities  are  on   Officers 
hand,  in  order  to  close  the  records,  assemble  the  items  and 
compile  a  table  showing  the  situation  in  all  branches  of  the 
service.     The  general   inspector  of  finances   examines  first, 
also  on  the  spot,  the  superior  accountable  officers,  and  then 
as  many  as  possible  of  the  subordinate  accountable  officers  who 
already  have  been  examined  by  their  local  superiors.     The 
administrative  control  consists  in :     ( i  )  The  periodical  sub- 
mitting of  statements,  accompanied  by  documents  substanti- 
ating the  revenues  and  the  expenditures;   (2)   examinations 
made  by  local  superiors  or  by  the  general  inspector  of  finances 
{Inspection  generale  des  finances). 


Double  Entry  Accounting 


Is  the  keeping  of  accounts  by  double  entry  a  procedure  of 
control?  This  has  often  been  claimed;  let  us,  therefore,  de- 
scril:>e  the  double  entry  system,  because  it  falls  essentially 
within  the  purview  of  a  work  devoted  to  the  subject  of  the 
budget. 

Accounting  by  double  entry  is  defined  as  follows  by  Article 
1440  of  the  general  instruction  on  finances,  of  June  20,  1859: 


Double 

Entry 

Bookkeeping 


"Since  1808,  the  accounts  of  the  collectors  general  and 
special  collectors  have  been  kept  by  double  entry.  This 
method  consists  of  using  for  the  description  of  each  oper- 
ation two  agents  or  accountable  officers,  one  of  which  is 
debited  and  the  other  credited.  In  fact,  every  operation 
of  accounting  is  necessarily  composed  of  and  satisfies  two 
opposing  interests ;  the  thing  which  releases  one  part  obli- 
gates another,  and,  therefore,  there  is  always  in  existence 
for  one  and  the  same  operation  a  crediting  agent  and  a 
debiting  agent';  the  one  who  owes  is  the  debtor;  the  one 
to  whom  something  is  due  is  the  creditor." 

545 


THE  BUDGET 


The  Place 

of  Single 
Entry 


Double 

Entry 

Accounting 

Means 

Security 


This  quotation  contains  almost  a  complete  outline  of  the 
matter ;  it  is  useless  to  wonder  at  its  perfection,  because  Mol- 
lien  himself,  who  was  its  author,  inserted  it  verbatim  in  his 
account  of  the  Treasury  for  the  year  XIV,  Republican  calen- 
dar [1805] ;  the  bulletin  of  instruction  for  the  year  1859  ap- 
propriated this  definition.  Hereinafter  are  given  the  com- 
mentaries suggested  by  it. 

Accounting  by  single  entry,  which  must  form  the  point  of 
departure  for  the  study  of  its  younger  sister,  represents  ele- 
mentary accounting,  which  consists  simply  of  describing  the 
operations  as  they  succeed  each  other.  Accounting  by  single 
entry  "originated  in  the  household  and  was  invented,  without 
doubt,  by  those  useful  individuals  to  whom  the  mission  of 
forming  the  language  has  too  often  been  entrusted."  Leon 
Say  so  expressed  himself  on  the  subject  in  his  charming  paper, 
to  which  we  shall  turn  again.  Accounting  by  single  entry  en- 
ters all  operations  as  they  are  carried  out.  It  then  reports 
these  operations  in  auxiliary  books  arranged  in  subdivisions 
of  all  kinds.  Thus,  the  collectors,  whose  accounts  are  kept 
by  single  entry,  enter  all  collections  as  they  are  received  from 
the  taxpayers  on  a  stub  daybook  (journal  a  souche).  Then, 
analyzing  this  stub  daybook,  they  distribute  the  entries  ac- 
cording to  the  statistics  between  the  recapitulation  book  {livre 
recapitulatif)  and  the  ledger  {livre  des  comptes  divers  par 
service).  In  this  lies  the  deficiency  of  the  system.  How  about 
a  guarantee  that  the  auxiliary  books  are  well  kept?  How  is 
it  possible  to  know  that  the  entries  in  the  daylxx)k  have  al- 
ways been  exactly  and  completely  copied  in  these  auxiliary 
books  ? 

Jean-Baptiste  Say  formulated  an  objection  as  follows :  "You 
see  that  if  through  the  forgetfulness  of  a  clerk  or  a  mistake, 
some  item  is  omitted  or  has  been  incorrectly  posted,  one  does 
not  necessarily  discover  the  error."  There  is  no  doubt  that 
the  cash  on  hand  serves  as  a  control  of  the  balances  of  the 
daybook.  This  forms  a  very  convincing  guiding  mark.  But 
if  the  auxiliary  books,  which  do  not  balance  with  the  cash 
on  hand,  have  been  improperly  posted,  nothing  informs  the 
accountable  officer  of  this  fact.  The  accountable  officer  has 
no  other  guarantee  of  the  exactness  of  his  reports  than  the 
degree  of  care  he  devotes  to  his  work. 

Accounting  by  double  entry,  on  the  contrary,  gives  to  all 
accounts,  regardless  of  the  extent  of  their  development,  a 
full  security  and  at  the  same  time  an  automatic  security.    Jeanr 

546 


NECESSITY  OF  CONTROL 

Baptiste  Say  explains  in  this  connection  very  clearly  as  fol- 
lows: 

"In  bookkeeping  by  double  entry,  each  entry  is  con- 
trolled by  a  corresponding  entry,  so  that  it  would  be 
necessary  to  commit  two  errors  of  precisely  the  same 
sort  which  would  balance  one  another,  otherwise  the 
error  must  be  discovered."  Jean-Baptiste  Say  adds: 
'The  same  method  also  makes  it  possible  to  realize  much 
more  exactly  the  result  of  each  operation  and  of  every 
sort,  because  these  operations  are  personified,  so  to 
speak;  they  are  charged  with  what  they  owe  and  are 
credited  with  what  is  due  them." 

Barreme,  in  1721,  said:  "Double  entries  are  proper  for  all 
affairs  involving  much  detail."  ^ 

Accounting  by  double  entry  has  thus  two  advantages  over 
its  rival:  It  gives  an  exactness  to  all  accounts  and  even  to 
auxiliary  accounts  (ecritiires  de  develop pement)  and  it  pre- 
sents the  many  phases  of  operations  under  their  most  striking 
aspect  without  this  multiplicity  interfering  with  the  correct- 
ness of  the  figures. 

Leon  Say  revives  this  subject:  "Modern  accounting," 
he  says,  "is  an  art  of  the  imagination  which  bears  the 
earmarks  of  Italian  and  Greek  genius.  ...  It  is  a  mar- 
velous invention,  a  kind  of  mythology.  The  shepherds 
of  ancient  Greece,  when  quenching  their  thirst  at  a  spring, 
thought  that  they  saw  the  nymph  of  the  waters;  they 
filled  Nature  with  a  throng  of  beings  among  whom  they  Leon  Say 
lived  as  among  a  society  superior  to  human  society. 
When  the  race  of  shepherds  became  a  race  of  tradesmen, 
it  brought  into  business  life  their  liking  for  fiction.  The 
cash  and  the  storehouse  became  for  them  mythological 

^  Traite  des  parties  doubles,  by  M.  Barreme,  Paris,  1721.  The 
author  adds:  ''M.  Colbert  always  desired  to  have  all  the  business 
transactions  of  the  king  kept  by  double  entry.  He  was  unable  to 
execute  this  great  plan  of  his,  because  he  did  not  find  any  individ- 
uals who  would  be  able  to  substitute  the  double  entry  system  for  the 
ancient  system  and  for  the  accounting  system  of  the  chamber  of 
accounts  {chambre  des  Comptes).  MM.  Paris  have  introduced  this 
magnificent  arrangement  in  the  taxes  (fermes)  and  in  the  general 
revenues:  nothing  can  equal  in  beauty  the  plan  which  they  have 
drafted;  nothing  is  more  appropriate  for  the  real  interests  of  His 
Majesty  than  the  execution  of  this  plan." 

547 


Fanciful 
Picture 


THE  BUDGET 

personalities,  plebeian  gods,  which  did  not  fail  to  have 
altars  erected  to  them.  .  .  /' 

It  is  a  great  temptation  to  quote  in  extenso,  this  charming 
study  which  was  read  by  its  author  at  the  tri-monthly  meet- 
ing of  the  Five  Academies  on  January  6,  1886;  but  we  are 
bent  particularly  on  utilizing  L^on  Say's  conclusions,  which 
run  as  follows : 

"A  personality  can  be  given  to  business  transactions," 
he  says;  ''this  is  a  way  to  study  them  closely;  but  they 
should  not  be  given  a  double  face,  nor  should  the  mask 
of  abundance  be  put  on  poverty.  And,  as  I  am  talking 
mythology  and  fairy  tales,  I  shall  avail  myself  of  their 
language  in  order  to  say  to  the  accountable  officers  who 
attempt  to  make  abuses  of  the  double  entry  system,  that, 
although  it  is  beautiful  to  love  Galatea,  it  is  wrong  to 
seduce  her." 

This  last  allusion  reveals  the  dangers  of  accounting  by 
double  entry.  Undoubtedly,  the  accountable  officer  himself 
will  always  find  some  safeguard  against  mistakes ;  but  if  he  is 
not  mistaken  himself,  cannot  he  fool  others  by  his  system? 
Possibility  When  an  operation  covers  seven  or  eight  folios  of  the  ledger 
l^efore  finding  its  definite  counterpart,  when  at  every  trans- 
formation, this  operation  disguises  itself  with  some  new  title, 
when  the  original  figures  are  subdivided,  decomposed,  recon- 
stituted, according  to  the  necessities  of  the  accounts — how  is 
it  possible  to  follow  this  maze  with  security?  How  is  it  pos- 
sible to  arrive,  without  running  the  risk  of  getting  lost,  at  the 
net  balance  of  the  accounts?  The  increasing  throngs  of  per- 
sonages which  cross  each  other,  the  variety  of  masks  which 
they  put  on,  troubles  the  party  going  through  the  accounts, 
complicates  the  investigations  and  diverts  from  the  purpose 
by  obscuring  the  straight  line.  Thus,  in  order  to  ascertain 
clearly  the  situation  of  the  treasury  of  an  accountable  officer, 
in  order  to  obtain  the  full  facts  from  the  mass  of  his  figures 
as  to  the  balance  that  should  be  on  hand  as  compared  with  the 
actual  balance,  the  first  care  of  the  auditor  consists  in  trans- 
forming prosaically  all  this  scientific  double  entry  accounting 
into  accounting  by  single  entry.  As  soon  as  the  inspection  gen- 
eral of  finances  begins  to  examine  the  office  of  a  special  col- 
lector or  of  a  treasurer  general,  it  first  proceeds  to  balance  the 

548 


of  Fraud 


NECESSITY  OF  CONTROL 


accounts  (depotdller  la  balance)  of  the  ledger — that  is,  "to  re- 
duce the  balance  shown  by  double  entry  to  a  balance  shown  by 
single  entry/'  As  soon  as  this  common  transformation  is  ac- 
complished and  as  soon  as  the  accounts  are  reduced  to  their 
elementary  meaning,  the  inspector  can  efficaciously  perform  his 
feat  of  clairvoyance. 

The  accounting  by  double  entry  has  never  prevented  sus- 
picious balance  sheets  from  remaining  undecipherable  to  the 
most  expert  eyes :  The  courts  themselves  ascertained  that  the 
official  statements  published  by  the  Comptoir  d'escompte  and 
by  the  Societe  des  depots  et  comptes  courants,  on  the  eve  of 
their  bankruptcy,  did  not  disclose  to  the  stockholders  the  con- 
dition of  those  establishments.  Accounting  by  double  entry 
does  not  always  furnish  the  verifying  agent  with  the  moral 
conviction  that  the  accountable  officer  finds  in  double  entry 
accounting,  and  for  whom  alone  the  latter  has  been  invented ; 
therefore,  we  shall  include  with  reservation  double  entry  ac- 
counting among  the  instruments  of  administrative  control. 


Some  Illus- 
trations 


Judicial  Control  Over  the  Ordonnateurs 

The  ordonnateurs — who,  because  of  their  position  as  min- 
isters are  exempt  from  administrative  control — 'are  equally 
exempt  from  judicial  control.  "The  Coiir  des  Comptes  can 
in  no  case  arrogate  to  itself  jurisdiction  over  the  ordonna- 
teurs." This  is  the  principle  of  the  law  of  September  i6,  1807, 
which  is  still  in  force.  We  shall  see,  however,  that  certain 
procedures,  described  later,  adroitly  remove  the  obstacle  op- 
posed to  the  judicial  control  over  the  ordonnateurs. 


Judicial  Control  Over  the  Accountable  Officers 

The  control  of  daily  current  operations  during  the  execu- 
tion of  the  budget  is  succeeded,  as  far  as  the  accountable  offi- 
cers are  concerned,  at  the  expiration  of  their  administrative 
periods,  by  judicial  control. 

When  the  year  is  terminated,  and  even  before  that,  in  case 
of  cessation  of  functions  on  his  part,  each  accountable  officer 
prepares  an  account  of  his  administration,  which  is  intended 
to  become  the  basis  for  an  audit;  this  account  according  to 
sacrosanct  formulas  must  contain  the  following:  (i)  A 
statement  as  to  the  situation  at  the  opening  of  the  administra- 
tive period;  (2)  revenues  and  expenditures  of  all  kinds  col- 

549 


The  Ac- 
countable 
Officers 
Must 
Render 
Statements 


THE  BUDGET 


These 
Statements 
Are 
Examined 


lected  and  disbursed;  (3)  a  statement  of  the  situation  at  the 
expiration  of  the  administrative  period,  containing  an  indica- 
tion as  to  the  balance  of  money  in  the  Treasury  and  the  se- 
curities in  the  portfoHo.  (Article  23  of  the  decree  of  May  31, 
1862.)  The  accounts  are  declared  to  be  sincere  and  truthful, 
signed,  dated  and  submitted  to  the  authority  which  has  charge 
of  examining  them  in  the  form  and  within  periods  prescribed 
by  regulations.  These  accounts  must  be  in  condition  to  un- 
dergo examination  {un  etat  d'examen)  and  supported  by  sub- 
stantiating documents,  classified  according  to  the  order  of 
operations.  (Article  27.)  Rendered  by  annual  administra- 
tive period,  except  in  cases  of  interruptions  (coupures)  re- 
sulting from  personal  administrative  periods,  they  include  two 
parts:  One,  relating  to  the  complementary  operations  of  the 
expired  fiscal  period,  and  the  other,  relating  to  the  operations 
of  the  first  year  of  the  current  fiscal  period  (Article  317)  ;  this 
division  subsequently  permits  one  to  pass  from  accounts  by 
administrative  period  to  accounts  by  fiscal  period.  A  final 
summary  recapitulates  the  total  of  the  administration. 

The  central  administration,  upon  receiving  the  accounts  of 
an  administrative  period,  submits  them  to  a  preliminary  veri- 
fication in  the  bureaus  of  the  general  accounting  of  finance. 
Then  it  turns  them  over  to  the  Cour  des  Comptes,  which  tests 
them  according  to  judicial  formalities  described  in  the  follow- 
ing chapters. 


550 


CHAPTER  XXVIII 
COUR  DES  COMPTES 

The  Old  Chamber  of  Accounts:  Thirteen  Chambers  of  Accounts; 
Functions;  Distinguished  Names;  Routine  for  the  Statements; 
Lack  of  Uniformity;  Accounts  Sometimes  Delayed;  Grave  Abuses 
Arose;   Resume;  The  Chambers  of  Accounts  Abolished. 

Bureau  of  Accounting;  Fifteen  Commissioners;  The  National  As- 
sembly; Universality  of  Authority;  Hopelessness  of  the  Theory; 
A  Commission  in  Lieu  of  Bureau ;  The  Commiss,ion  Was  Swamped ; 
Experience  Developed  Two  Ideas. 

Coiir  des  Comptes:  The  Cour  des  Comptes  Succeeded;  Personnel  of 
the  Cour  des  Comptes;  The  Routine  of  an  Examination;  Other 
Functionaries;  The  Procedure  Since  1807;  Jurisdiction  Extended; 
Four  Classes  of  Accountable  Officers ;  Accountable  Officers  Han- 
dling Cash;  Accountable  Officers  Handling  Materials;  The  Cotnp- 
tables  d'ordre;  The  Comptables  de  Fait;  the  Cour  des  Comptes' 
One  Hundred  and  Thirty-five  Members. 

An  order  (jugement)  was  required  to  release  accountable 
officers  under  the  old  regime  as  now,  because,  in  those  days,  a 
legal  mortgage  ^  encumbered  their  properties  and  the  deposit 
of  a  bond  was  also  demanded.  The  necessary  order  emanated 
from  the  Chamber  of  Accounts  (Chambres  des  Comptes). 

The  Old  Chamber  of  Accounts 

In  order  to  describe  the  organization  of  the  chambers  of 
accounts,  we  shall  not  go  back  to  the  time  of  Philippe  V, 
called  ''the  Long,"  who,  in  his  ordinance  of  July  28,  13 18, 
said :  "We  have  ordered  that  we  shall  examine  the  accounts 
of  each  officer  of  the  State  by  our  accounting  agents."  We  Thirteen 
shall  study  only  the  situation  immediately  preceding  the  Revo-  Chambers 
lution  of  1789.^     There  were  thirteen  chambers  of  accounts  of  Accounts 

^  Edict  of  August,  1669,  regulating  "the  mortgages  of  His  Majesty 
on  the  properties  of  his  accounting  officers,  contractors  (fermiers) 
and  others  handling  his  funds." 

2  The  Cour  des  Comptes,  through  a  very  legitimate  sentiment  of 
respect  for  the  past,  reproduced  annually  this  old  inscription  in  the 
preface  of  its  general  declarations.     The  Cour  des  Comptes  should 


THE  BUDGET 


Functions 


Dis- 
tinguished 
Names 


at  the  end  of  the  eighteenth  century.^  The  Paris  chamber, 
because  of  its  location,  had  special  functions,  such  as  the 
registration  of  royal  marriage  contracts,  of  peace-treaties,  of 
fiscal  edicts  imposing  extraordinary  taxes  in  concert  with  the 
parlement,  etc.  .  .  .  The  chamber  of  accounts  has  been  de- 
scribed in  ancient  documents  as  the  ark  and  the  respository 
of  the  claims  and  information  of  the  Crown  and  of  the  secrets 
of  the  State,  the  guardian  of  the  royal  prerogatives,  and  the 
conservator  of  the  properties  and  domains  of  the  king.  Be- 
sides, the  celebrity  of  several  of  its  members  gave  special  pres- 
tige to  the  chamber  of  accounts.  At  the  time  of  the  installa- 
tion of  the  first  Cour  des  Comptes  in  the  Palais  de  Justice  in 
1807,  Attorney  General  Gamier  recalled  the  names  of  illus- 
triqus  men  who  formerly  met  on  those  premises: 

"These  walls,  these  palaces,"  he  said,  "are  filled  with 
venerable  memories.  Here  on  these  premises  resided  the 
ancient  family  of  the  Nicolai,  which  from  one  reign  to 
another,  from  generation  to  generation,  gave  a  perma- 
nent illustration  of  ability  combined  with  virtue.  Being 
the  rivals  of  the  Lamoignon  and  of  the  Mole,  they 
ecjualed  them  in  dignity  and  in  merit.  On  these  prem- 
ises, the  functions  of  the  public  minister  were  performed 
by  fitienne  Pasquier,  celebrated  for  his  devotion  to  the 
King,  his  vast  erudition,  and  his  historical  research 
work."  2  (Speech  of  Attorney  General  Gamier,  Novem- 
i  ber  5,  1807.) 

More  recently,  a  speech — ^made  on  the  convening  of  a  ses- 
sion and  devoted  to  the  various  installations  of  the  Cour  des 
Comptes — used  more  sober  words: 

not  forget  that  its  most  important  prerogatives  date  back  only  to  the 
establishment  of  the  parliamentary  regime,  that  is,  to  the  beginning 
of  the  nineteenth  century. 

1  The  thirteen  chambers  of  accounts  were  those  of  Rouen,  Dijon, 
Grenoble,  Nantes,  Nancy,  Metz,  Pau,  Besanqon,  Bar-le-Duc,  Mont- 
pelier,  Aix,  Lille  and  Paris  (including  the  parlements  and  the  Chatn- 
bres  des  Aides  [a  bureau  for  taxes  called  the  aides,  now  replaced  by 
the  indirect  taxes],  to  which  were  delegated  the  functions  of  a  cham- 
ber of  accounts). 

2  In  this  connection,  the  speaker,  carried  away  by  the  enthusiasm 
of  the  moment,  added:  "Oh,  if  he  had  lived  under  the  reign  of 
Napoleon  (he  lived  under  the  reign  of  Henry  III),  he  would  rather 
haye  devoted  his  talents  to  painting  the  great  period  of  which  we 
are  witnesses  and  preserving  for  posterity  the  magnificent  destinies 
of  the  Empire." 

552 


COUR  DES  COMPTES 

"The  monuments  which  have  disappeared  were  occu-  ] 
pied  by  our  illustrious  predecessors,  such  as  Henry  de 
Sully,  Olivier  de  Longueil,  Michel  de  I'Hospital,  Etienne 
Pasquier,  the  Nicolai  and  many  other  prominent  officers 
whose  respected  names  adorn  our  annals."  (Speech  of 
Advocate  General  Biollay,  October  i6,  1886.) 

Besides  these  honorary  prerogatives,  the  chamber  of  ac-  Routine  for 
counts  of  Paris  had  no  actual  supremacy  over  the  twelve  s^Ja^en^ents 
provincial  chambers.  Composed  like  the  latter  of  presidents, 
managers,  correctors  and  auditors,^  the  chamber  of  accounts, 
like  the  provincial  chambers,  passed  exclusively  on  the  state- 
ments of  the  accountable  officers  of  its  district.  The  accounts 
submitted  through  procurators  were  first  examined  by  con- 
sulting auditors,  with  a  view  to  ascertaining  whether  each 
item  of  revenue  and  of  expenditure  was  justified  in  conform- 

^  According  to  the  Almanack  Royal  of  1788,  the  chamber  of  ac- 
counts of  Paris  was  composed  of  the  following  members:  One  first 
president,  12  presidents,  78  consulting  head  accountants,  38  consult- 
ing correctors,  80  consulting  auditors,  3  representatives  of  the  King, 
one  advocate  general,  one  attorney  general  and  his  substitute,  2  head 
registrars,  one  recording  registrar,  book  guards,  disbursers  of  pay- 
ments, comptrollers,  doorkeepers,  agents,  messengers  and  a  super- 
visor for  ceremonies,  etc. 

The  number  of  the  members  of  the  chamber  of  Paris  (212,  includ- 
ing the  consulting  officers,  presidents  and  representatives  of  the  king) 
seems  excessive  for  only  one  of  thirteen  jurisdictions  into  which 
the  kingdom  was  divided;  the  present  Cour  des  Comptes,  which  is 
the  only  one  for  the  entire  territory  of  France,  has  only  135  members. 
But  this  large  number  of  presidents,  consulting  head  accountants, 
consulting  correctors,  consulting  auditors  of  the  chamber  of  accounts 
of  Paris,  is  not  surpassing  when  one  knows  that  the  officers  alternated, 
serving  for  half  of  the  time  only.  Every  one  of  the  officers  is  marked 
in  the  Almanach  Royal  with  the  letter  H  or  capital  E.  The  letter  H 
applies  exclusively  to  the  winter  service,  and  the  letter  E  exclusively 
to  the  summer  service.  The  winter  half  year  used  to  begin  on  Janu- 
ary I,  and  ended  on  the  last  day  of  June;  the  half  year  of  summer 
began  on  July  i  and  ended  on  the  last  day  of  December.  The  mem- 
bers of  the  winter  service,  with  the  change  of  the  season,  relieve 
their  colleagues  of  the  summer  service  and  vice  versa.  Only  the 
first  president,  the  advocate  general,  the  attorney  general  and  the 
head  registrars  are  marked  simultaneously  with  the  letters  H  and  E. 
Besides,  the  entire  chamber  did  not  sit  on  Thursdays  and  Saturdays 
of  every  week  and  on  eves  of  holidays,  in  the  afternoon;  further- 
more, the  chamber  of  accounts  adjourned  on  Holy  Tuesday  until  the 
next  day  after  the  Sunday  Quasimodo;  the  same  was  the  case  on  the 
Saturday  before  Whitsuntide  until  the  next  day  after  Trinity  Sunday 
and  then  during  the  long  vacations. 

553 


THE  BUDGET 


Lack  of 
Uniformity 


Accounts 

Sometimes 

Delayed 


ity  with  the  laws  on  the  subject.  According  to  the  report  of 
the  verifying  auditor,  the  chamber  of  managers  (chambre  des 
maitres)  decided  on  the  admission  or  the  rejection  of  the 
account.  When  the  first  decision  was  favorable,  the  account 
was  passed  into  the  hands  of  the  correctors  who  verified  its 
material  side,  that  is,  the  exactness  of  figures  and  calculations, 
and  submitted  their  report  on  the  subject  to  the  chamber  of 
managers;  the  latter  then,  in  case  of  necessity,  pronounced 
the  release  (quitiis).  The  consulting  managers  (conseillers 
maitres)  constituted  under  the  old  regime,  as  now,  the  actual 
judges. 

In  spite  of  common  forms,  each  chamber  of  accounts  was 
distinct;  there  was  no  general  recapitulation  of  the  total  of 
their  orders  with  the  total  of  the  accounts  of  the  Treasury. 
The  attorneys  general  of  each  province  were  supposed  to 
transmit  to  the  chamber  of  accounts  of  Paris  a  summary  of 
the  orders  issued  by  their  respective  chambers  of  accounts. 
These  communications  were  very  irregular  and  were  never 
used. 

Great  abuses  appeared  in  the  execution  of  the  program: 
First  of  all,  permanent  delays  occurred  in  the  submitting  of 
accounts. 

^  "Nothing  could  possibly  justify  a  delay  of  fifteen 
years.  .  .  .  There  are  accounts  which  have  been  delayed 
eight  to  sixteen  years,  several  for  fifteen  years,  some 
for  twelve  years  and  a  large  number  for  ten  years  .  .  . 
disorder  in  finances  and  disorder  in  accounts  have  always 
been  inseparable.  For  a  long  time  they  throve,  one 
through  the  other:  nor  could  they  end  matters  save  both 
acting  at  once."  (Report  read  to  the  National  Assembly 
on  the  arrears  of  accounting,  in  the  name  of  the  central 
committee  on   liquidations,   by   M.    Beaumez,   May   25, 

w    1791-)  • 


Furthermore,  strange  irregularities  resulted  from  the  or- 
donnateurs  themselves : 

^  "It  appears  that  endeavors  were  made  to  mix  the  fiscal 
periods  which  were  distant  from  each  other  in  order  to 
prevent  any  verification  whatsoever.  There  was  no  per- 
manent rule  or  basis  on  which  positive  adjustments  could 
be  made  from  one  year  to  the  next  as  between  the  reve- 

554 


COUR  DES  COMPTES 

nues  and  the  expenditures.  ;  Finally,  came  the  gravest 
thing  of  all,  the  acquits  au  comptant  ^  of  which  we  have 
spoken;  their  painful  increase  from  the  times  of  Colbert 
to  our  day  is  alarming.  ...  It  is  no  longer  necessary 
that  the  receipts  in  accounting  be  a  mass  of  informal 
documents,  made  out  whenever  needed  by  the  ordonna- 
tetirs,  in  order  to  devise  the  friction  as  to  the  revenues 
and  expenditures  of  France." 

In  the  third  place,  arbitrariness  and  favoritism  suspended   ^^^^^ 
the  execution  of  the  most  important  orders.    At  one  time,  the  Aros^e^ 
Conseil  dti  Roi  brought  before  it  particularly  suspicious  ac- 
counts in  order  to  audit  them  outside  of  the  judicial  authori- 
ties.^    At  other  times,  powerful  influences  succeeded  in  sus- 
pending the  execution  of  orders  which  were  made  definite : 

"Crimes  of  forgery  discovered  in  the  management  of 
an  accountable  officer,  crimes  in  which  many  accomplices 
were  implicated,  have  so  tardily  formed  the  subject  of 
prosecution  that  the  zeal  of  the  Chamber  was  vain  and 
barren  of  results.  All  the  administrators  and  the  ac- 
countable officers  who  cooperated  in  committing  the  for- 
geries were  dead  when  it  was  finally  decided  to  start  an 
action.  .  .  .  Thus,  an  accountable  officer  convicted  of  an 
embezzlement  of  800,000  livrcs,  and "  imprisoned  in  the 
conciegerie  obtained  a  safe  conduct,  procured  while  the 
king  was  making  his  devotions  and  signed  by  a  minister; 
thus  he  got  the  iDCSt  of  the  law.^  And  what  grieves  the 
Chamber  most  is  that  the  released  accountable  officer,  it 
is  said,  had  been  entered  on  the  list  of  pensioners.  It 
appeared  that  fifty  accountable  officers  during  the  last 
twenty  years  have  committed  frauds.  The  resulting  loss 
to  the  Treasury  could  be  estimated  at  30,000,000;  the 

*  The  acquits  au  comptant  were  simple  notes  by  which  the  king  or 
the  comptrollers  general  ordered  the  payment  of  some  determined 
sums  for  the  benefit  of  a  person  whose  name  often  did  not  appear 
at  all,  and  in  all  cases  without  the  indication  of  motives,  or  any  sub- 
stantiating documents.  See  on  this  subject  our  history  of  the 
Finances  de  Vancien  regime  et  de  la  revolution. 

2  The  general  administration  of  the  aides  succeeded  even  in  eman- 
cipating its  accounting  from  the  jurisdiction  of  the  chamber  of  ac- 
counts and  accounted  before  the  King's  Council   {Conseil  du  Roi). 

^  Dupile  de  Saint-Severin,  Treasurer  of  the  household  troops  of 
the  king. 

555 


Resume 


The 

Chambers 
of  Accounts 
Abolished 


THE  BUDGET 

loss  to  the  public  has  not  been  calculated.  .  .  .  None  of 
these  peculations  has  been  punished.  The  zeal  of  the 
Chamber  has  always  been  restrained." 

In  brief  we  see :  ( i )  Considerable  delays  in  the  preparing 
of  accounts;  (2)  scandalous  irregularities  in  the  accounts;  (3) 
impunity  for  the  guilty ;  all  this  was  ascertained  by  an  investi- 
gation made  by  the  chamber  of  accounts  of  Paris,  the  results 
of  which  work  were  submitted  by  the  first  president  of  the 
chamber  of  accounts  of  Paris  to  the  National  Assembly  on 
July  23,  1789.  (Remarks  on  the  accounting  and  the  jurisdic- 
tion of  the  Chamber  of  Accounts,  1789,  National  Library, 
L.  /.  2y,  36.)    The  Chamber  concluded  as  follows: 

"The  Chamber  is  not  limited  to  complaints  only,  it  has 
constantly  surrounded  the  steps  of  the  Throne.  Its  offi- 
cers have  perpetually  besieged  the  cabinets  of  ministers. 
Its  commissions  have  attempted  to  penetrate  into  the 
bureaus.  They  have  not  failed  in  action  nor  in  obser- 
vation. .  .  .  The  officers  of  our  company  have  devoted 
themselves  (this  is  to  use  the  term  of  the  old  ordinances) 
to  functions  of  very  melancholy  nature.^  Only  the  de- 
sire to  serve  their  fellow  citizens  upholds  them  in  these 
irksome  operations  and  makes  them  renounce  all  illusions 
of  self-pride." 

This  peroration  disclosed  the  real  intention  of  the  speaker, 
who  by  the  belated  wail  hoped  to  regain  the  sympathies  of  the 
Constitutional  Assembly.  The  decree  of  September  7,  1790, 
declared:  "Article  12.  The  chambers  of  accounts  shall  be 
abolished  as  soon  as  a  new  system  of  accounting  is  provided." 
The  law  of  July  4,  1791,  while  confirming  this  abolition,  de- 
clared that  "The  chambers  of  accounts  shall  on  this  date  cease 
to  perform  its  functions."  ^ 


Bureau  of  Accounting 

Instead  of  chambers  of  accounts,  the  Constitutional  Assem- 
bly organized  a  bureau  of  accounting   (bureau  de  compta- 

1  The  functions  in  question  were  not  so  "very  melancholy"  in  for- 
mer times,  because,  in  spite  of  "their  internal  complaints,"  members 
of  the  chamber  bought  them  for  cash  or  bequeathed  them  like  a 
precious  heritage  from  father  to  son. 

2  In  November,  1792,  the  old  papers  from  the  storehouses  of  the 
chamber  of  accounts  were  sold  by  weight. 

556 


COUR  DES  COMPTES 


bilite),  the  functions  of  which  are  sufficiently  described  in  the 
following  text: 

"There  shall  be  established  a  bureau  of  accounting 
composed  of  fifteen  persons,  who  shall  be  appointed  by 
the  king.  The  said  commissioners  shall  receive  all  the 
accounts  which  are  hereinafter  mentioned  and  shall  pre- 
pare the  reports.  Each  report  must  be  signed  by  three 
commissioners,  who  will  be  responsible  for  the  text  to 
which  they  have  certified;  said  accounts,  after  examina- 
tion in  the  bureau  of  accounting  shall  be  examined  and 
definitely  audited  by  the  legislative  National  Assembly, 
according  to  the  provisions  of  Article  i  of  the  present 
year."  (Law  of  September  17,  1791,  Articles  2,  3,  4 
and  5  of  Part  II.) 


Fifteen 
(Commis- 
sioners 


The 

National 

Assembly 


Article  i  of  this  law  of  September  17,  1791,  read:  "The 
National  Assembly  shall  examine  and  definitely  audit  the  ac- 
counts of  the  nation" ;  thus,  the  control  over  the  operations 
of  revenues  and  of  expenditures  was  henceforth  turned  over 
to  the  nation.  The  report  on  the  subject  read  as  follows: 
"It  is  only  right  that  the  representatives  of  the  nation,  who 
have  the  power  to  pass  on  the  revenues  and  the  expenditures, 
should  know  the  destination  and  the  use  of  them."  (Report 
of  Cochard,  September  7,  1791.)  It  is  incontestable  that  the 
representatives  of  the  country  have,  in  the  last  resort,  the  right 
to  verify  and  to  audit  the  accounts  of  the  nation,  but  upon 
condition  that  a  tribunal  shall  first  regularly  control  the  ac- 
countable officers.  "An  account  is  not  an  affair  which  can 
be  arranged  amicably,"  Malouet  used  to  say;  "it  is  necessary 
that  a  control  be  maintained  and  an  actual  verification  made 
of  the  accounting  records.  The  establishing  of  a  tribunal 
therefore  cannot  be  dispensed  with,  because  a  tribunal  alone 
has  the  right  to  pass  judgment."  (Speech  of  Malouet,  Sep- 
tember 8,  1 79 1.)  The  Constitutional  Assembly,  however, 
failed  to  understand  at  that  time  the  possibility  of  a  coexist- 
ence of  its  own  legislative  control  and  the  control  of  a  tribu- 
nal ;  a  false  conception  of  the  universality  of  its  authority  led  ^f^A  7h^''*^ 
the  Constitutional  Assembly  to  believe  that  it  should  do  every- 
thing. Since  this  was  impossible,  it  was  compelled  to  turn 
over  the  preparatory  work  to  cooperating  agencies. 

"It  is  impossible,"  said  Dandre,  a  deputy,  "that  the 
legislative  body  should  deprive  itself  of  forty  or  sixty 

557 


THE  BUDGET 

deputies  who  shall  use  their  entire  time  to  examine  thou- 
sands of  records."  "It  is  our  business  to  establish  rules 
for  auditing;  but  it  is  not  our  business  to  occupy  our- 
selves with  disputable  questions  of  accounting."  (Speech 
of  Cochard.)  ...  "A  commission  therefore  must  do  all 
the  preparatory  work,  and  it  must  be  said  in  the  laws  that 
the  account  shall  be  definitely  audited  by  the  nation." 
(Session  of  July  4,  1791.) 


Hopelessness 
of  the 
Theory 


A  Commis- 
sion in  Lieu 
of  Bureau 


In  consequence,  thereof,  clerks  under  the  supervision  of  the 
Assembly  composed  the  bureau  of  accounting  mentioned 
above.  The  course  of  events  did  not  fail  to  show  the  anom- 
aly of  this  conception,  because  the  Constitutional  Assembly, 
under  pressure  of  troubles  of  all  kinds  with  which  it  had  to 
deal,  lost  sight  of  the  work  of  the  verification  of  accounts. 
"It  is  evident,"  Camus  used  to  say,  "that  if  you  assign  to  the 
Assembly  the  task  of  auditing,  in  one  single  session,  1,800  in- 
dividual accounts,  none  of  them  will  be  examined."  (Septem- 
ber 8,  1791.)  Therefore,  although  a  large  number  of  reports 
had  been  prepared  by  the  bureau  of  accounting  from  1792 
until  1794,  none  had  been  examined  or  passed  upon.  "Verifi- 
cation was  always  done  by  the  bureau  of  accounting;  the  As- 
sembly passed  on  nothing."  (Speech  of  la  Jacqueminiere, 
Tribunate,  September,  1807.) 

This  condition  of  things  came  to  an  end  in  the  year  III  of 
the  Republic,  through  the  creation  ot  a  cormnission  on  national 
accounting  (Law  of  the  28th  Pluviose,  year  III  of  the  Re- 
public, February  16,  1795),  which  was  substituted  for  the 
bureau  of  accounting,  the  inefficiency  of  which  had  been  amply 
demonstrated.  The  new  commission  was  put  in  charge  of 
passing  definitely  on  the  reports  of  the  accountable  officers. 
The  commissioners  appointed  by  the  chambers,  upon  sugges- 
tion of  the  committee  on  finances — first  fifteen  in  number  and 
then  only  five  by  virtue  of  the  Constitution  of  the  year  III 
of  the  Republic,  and  then  seven,  by  virtue  of  the  Constitution 
of  the  year  VIII  ^  would  have  constituted  a  tribunal  of  ac- 
counts, if  the  irremovability  and  other  honorary  privileges  of 


^  The  Constitution  of  the  Consulate  of  the  22nd  Frimaire,  year 
VIII  of  the  Republic,  recited:  "Article  89.  A  commission  on  na- 
tional accounting  regulates  and  verifies  the  accounts  of  revenues  and 
expenditures  of  the  Republic.  This  commission  is  composed  of  seven 
members,  selected  by  the  Senate  from  the  national  list." 

558 


COUR  DES  COMPTES 

the  judiciary  had  been  accorded  the  latter;  these  commission- 
ers endeavored  to  perform  the  task  in  question  and,  in  the 
course  of  their  long  career  of  twelve  years,  many  accounts 
were  audited: 


**It  would  be  unjust  to  reproach  them  for  not  having 
audited  and  passed  all  the  accounts  with  celerity.  .  .  . 
It  is  sufficient  to  recall  the  immense  amount  of  fictitious 
values  which  increased  the  accounts  during  the  regime 
of  paper  currency  and  the  expenditures  of  all  sorts  re- 
quired by  circumstances  in  order  to  see  that  what  would 
have  been  but  an  ordinary  task  in  times  of  a  wise  ad- 
ministration necessarily  involved  under  the  conditions  an 
excessive  amount  of  labor."  (Speech  of  Defermon, 
councilor  of  the  State  in  the  legislative  body,  Septem- 
ber, 1807.) 


The  Com- 
mission 
Was 
Swamped 


In  Spite  of  their  efforts,  the  commissioners  could  not  pre- 
vent the  accumulation  of  arrears  of  work.  In  1807,  thousands 
of  accountable  officers  waited  for  eight  or  ten  years  for  a  de- 
cision on  their  accounts.  The  difficulties  in  which  many  fami- 
lies found  themselves  l^ecame  one  of  the  contributory  causes 
for  the  establishing  of  the  Cour  des  Comptes} 

Two  new  ideas  thus  emerged  from  the  abortive  attempts  of 
the  Revolution.  In  the  first  place,  the  definite  auditing  of 
accounts  rested  with  the  representatives  of  the  nation;  this 
principle  was  proclaimed  in  1791  and  is  not  now  contested. 
In  the  second  place,  also  in  1791,  the  superiority  of  a  single 
jurisdiction  over  the  earlier  multiplicity  of  jurisdictions  be- 
came obvious.  These  are  the  principles  which  we  shall  see 
developing  in  the  course  of  the  nineteenth  century. 


Experience 
Developed 
Two  Ideas 


^  "No  diligence  before  1807  could  have  cleaned  up  the  enormous 
heap  of  increasing  arrears,  which  dated  back  more  than  half  a  cen- 
tury. It  inspired  such  a  terror  that  several  councilors  were  impru- 
dent enough  to  suggest  burning  the  mass  of  documents  and  records 
accumulated  for  so  many  years  on  your  shelves."  (Speech  of  the -^ 
first  president,  Barbe-Marbois,  November  2,  1831.)  "A  number  of 
families  recovered  their  rights  as  to  immovable  property;  these  fami- 
lies were  all  deprived  for  years  of  the  privilege  of  proprietorship. 
Thousands  of  accountable  officers  were  absolved.  This  important 
service  which  France  owes  to  the  Cour  des  Comptes  was  worth  more 
than  the  conquest  of  a  province."  (Memoirs  of  a  Minister  of  the 
Treasury.) 


559 


THE  BUDGET 


The  Cour 
des 

Comptes 
Succeeded 


Personnel 
of   the 
Cour  des 
Comptes 


Cour  des  Comptes 

The  Cour  des  Comptes — established  by  the  law  of  Septem- 
ber 1 6,  1807,  and  regulated  by  the  decree  of  September  28, 
1807 — ^was  exclusively  charged  with  passing  on  the  accounts 
of  accountable  officers.  Later,  under  the  Restoration,  we  shall 
see  this  Cour  des  Comptes  becoming  an  auxiliary  to  the  legis- 
lative power.  In  1807,  however,  when  the  Imperial  system 
was  at  its  zenith,  these  functions  were  considerably  modified. 

"The  purpose  of  the  institution,"  said  the  councilor 
of  the  State,  reporting  to  the  legislative  body,  "is  to 
support  and  not  to  hinder  the  course  of  the  Government 
and  to  apply  the  severity  of  its  examinations  to  the  ac-. 
countable  officers  and  not  to  the  ordonnateurs.  The 
Cour  des  Comptes  cannot  possibly  pass  on  the  actions  of 
the  Executive."  (Speech  of  Defermon,^  September, 
1807.) 

If  the  only  function  entrusted  to  the  Cour  des  Comptes 
under  the  First  Empire  was  that  of  passing  on  accountable 
officers,  it  must  be  admitted  that  both  the  law  and  the  decree 
of  1807  admirably  defined  the  case.  It  was  a  complete  and 
definite  piece  of  work.  The  Cour  des  Comptes  was  supposed, 
according  to  the  will  of  the  Emperor,  to  represent  a  picked 
judiciary.  For  this  purpose,  the  law  of  September  16,  1807, 
declared  that  the  Cour  des  Comptes  "shall  rank  immediately 
after  the  court  of  cassation,  [the  Cour  de  Cassation  is  the 
supreme  court  of  appeal  in  France,  but  only  touching  grounds 
of  informality  in  the  proceedings  of  misinterpretation  of  the 
law]  and  shall  enjoy  the  same  prerogatives."  (Article  7.) 
The  members  of  the  Cour  des  Comptes  are  irremovable.  "The 
members  of  the  Cour  des  Comptes  are  appointed  by  the  Em- 
peror for  life."  (Article  6.)  The  Cour  des  Comptes  is  com- 
posed of  one  first  president,  three  presidents,  eighteen  senior 
accountants,  twenty-four  referees,  an  attorney  general,  one 
head  registrar  (greffier  en  chef).  (Article  2.)  This  is  the 
present  organization,  except  for  the  auditors  who  were  added 
in  1856. 

^  Defermon,  Councilor  of  the  State,  and  former  member  of  the 
Convention,  added  as  follows:  "Nothing  that  could  be  useful  can 
escape  the  genius  which  rules  over  us.  His  Majesty  is  not  less 
careful  of  the  szveat  of  his  people  than  of  the  blood  of  his  children." 


COUR  DES  COMPTES 

The  first  examination  of  accounts  and  the  preparation  of  The 
rejx)rts   rest   with   the   consulting   referees    who   are   always   of°"an"^ 
assisted  by  the  auditors,  who  themselves  can  be  authorized  to  Examina- 
make  the  reports  directly.^     These  reports  are  passed  by  the   ^*°" 
president  of  the  chamber  to  a  senior  accountant.     Each  cham- 
ber, composed  of  six  consulting  senior  accountants  and  of  a 
president,  hears  the  report  of  the  consulting  senior  account- 
ant, who  is  assisted  by  the  referee  in  charge  of  the  report. 
The  senior  accountant  first  passes  his  opinion,  and  then,  each 
senior  accountant  in  succession  in  the  order  of  his  appoint- 
ment.   The  president  writes  down  the  decision  on  the  margin 
of  the  report  and  pronounces  his  decision.     (Decree  of  Sep- 
tember 28,  1807,  Article  31.)     The  consulting  senior  account- 
ants are  reminiscent  of  the  judges  under  the  old  regime ;  they 
alone  passed  opinion  and  voted.     The  referees,  like  the  old- 
time  conseillers  correcteurs,  prepare  only  the  bases  for  the  de- 
cisions. 

The  attorney  general,  assisted  at  present  by  an  advocate  other 
general,  represents,  according  to  the  law  of  1807,  the  Minister   Function- 
of  Finance  and  the  Government  in  the  Coiir  des  Comptcs.   He  ^"" 
supervises  the  regularity  of  filing  the  reports  by  the  account- 
able officers  and  causes  penalties  to  be  inflicted  upon  those  who 
are  late;  he  is  consulted  with  respect  to  documents  which 
appear  to  warrant,  in  his  eyes,  a  more  special  examination; 
he  ascertains  the  exactness  of  the  meetings  of  the  chambers, 
the  regularity  of  the  service  of  the  referees  and  of  the  audi- 
tors; he  transmits  to  the  Minister  of  Finance  the  decisions 
of  the  Cour  des  Comptes;  he  gives  his  conclusions  in  a  certain 
number  of  important  matters,  corresponds  with  the  various 
ministers,  furnishes  required  informations,  etc. 

The  procedure  introduced  by  the  law  and  the  decree  of  The 
1807 — relating  to  delays,  to  the  forms  for  the  submitting  of    sfnce  1807 
temporary  decisions  suspended  by  injunctions,  and  to  the  defi- 
nite decisions  releasing  accountable  officers,  to  the  reform  of 
opinions  by  means  of  revision  or  reversal  before  the  Conseil 

^  The  decree  of  October  23,  1856,  which  established  auditors  at 
the  Cour  des  Comptes,  reads  as  follows:  "In  consideration  of  the 
fact  that  it  is  necessary  to  appoint  at  the  Cour  des  Comptes  a  class 
of  auditors  who  by  their  previous  studies  present  a  guarantee  of 
ability  for  the  functions  of  a  consulting  referee  at  the  said  Cour  des 
Comptes.  .  .  .  Article  2.  Auditors  shall  be  placed  under  the  authority 
of  the  first  president,  who  shall  be  able  to  attach  them  to  the  con- 
sulting referees  in  order  to  take  part  in  the  work  of  investigation 
an(J  of  verification  entrusted  to  these  officers." 

561 


THE  BUDGET 

d'Etat — remains  intact.  The  same  is  true  as  to  the  regula- 
tions by  virtue  of  which  the  Cour  des  Comptes  can  not  en- 
force its  decisions,  nor  can  it  create  a  debt  chargeable  to  the 
Treasury;  the  law  of  1807  has  not  been  changed  as  to  any 
of  these  points. 
Jurisdiction  In  1 843,  however,  the  jurisdiction  of  the  Cour  des  Comptes 
Extended  ^^^  extended  to  the  accounts  of  materials.  "The  accounts  of 
materials  (comptes  en  matieres)  are  submitted  to  the  control 
of  the  Cour  des  Comptes,''  reads  Article  14  of  the  law  of  June 
6,  1843.  The  ordinance  of  August  26,  1844— issued  for  the 
purpose  of  executing  the  law  of  1843 — regulated  the  method 
of  control  involved  in  the  purchase  of  materials  by  the  State 
for  consumption  and  manufacture.  Then,  the  decree  of  No- 
vember 19,  1 87 1,  aimed  at  the  ministry  of  war,  attempted  to 
establish  in  the  latter  a  correlation  between  the  accounts  in 
cash  and  accounts  in  materials,  in  order  to  follow  up  con- 
stantly the  conversion  of  the  State's  wealth,  when  it  passes 
from  the  vaults  of  the  Treasury  into  the  storerooms  and 
arsenals.  Since  then,  the  law  of  August  23,  1876,  the  decrees 
of  December  16,  1876,  of  November  23,  1887,  and  of  Sep- 
tember 6,  1888,  relating  to  supplies  and  the  works  of  the 
Navy,  etc.,*  have  been  promulgated. 

^  The  organization  of  an  accounting  system  for  materials  will 
always  be  very  difficult.  In  order  to  install  proper  order  in  these 
accounts,  which  are  so  little  suited  for  that  purpose,  it  would  be 
necessary  that  a  constant  link  should  connect  the  funds  with  the 
materials.  This  is  the  merit  which  the  account  called  in  Italy  patri- 
mony (patritnoine)  possesses.  Combining  in  one  total  the  entire 
wealth  of  the  country,  it  compels  all  the  financial  statements  to  group 
in  their  columns  these  two  elements  which  are  so  unlikely  to  be 
added  together,  the  materials  and  the  funds.  M.  Cerboni  says :  "The 
accounting  of  the  patrimony,  which  according  to  the  Italian  law 
includes  at  the  same  time  the  budgetary  results  and  those  of  the 
management  of  the  properties  and  materials  belonging  to  the  State, 
makes  of  it  a  single  organism,  corresponding  to  the  one  which  ad- 
ministrative life  presents  to  us.  But  this  account  of  the  patrimony, 
in  spite  of  its  apparent  and  incontestable  advantages,  has  very  great 
practical  objections.  Many  claim  that  the  results  are  and  can  be 
but  illusions. 

See  what  the  lamented  Leon  Say  says  on  the  subject  in  his  book 
called  les  Finances,  in  which  his  customary  sagacity  distinguished 
very  clearly  the  pro  and  the  contra.  In  a  publication  called  Groupe 
de  travail,  in  the  Ecole  des  sciences  politiques,  he  has  charmed  us 
with  his  ideas  on  this  rather  dry  subject,  on  the  occasion  of  the 
work  of  M.  Campagnole  published  in  the  annals  of  the  Ecole  des 
sciences  politiques,  in  1888,  volume  III.     See  also  "la  comptabilite 


COUR  DES  COMPTES 

These  are  the  only  modifications  grafted  on  the  masterly 
work  of  1807.  At  the  most,  certain  provisions  of  ordinances 
relating  to  accounting  in  the  time  of  the  Restoration  could 
be  cited,  as  well  as  the  decrees  of  August  12,  1854,  and  Janu- 
ary 7,  1856,  which  provided  for  the  division  of  the  transmit- 
ting of  accounts  to  the  Conr  des  Comptes  into  two  parts: 
One  containing  the  account  relating  to  the  actual  administra- 
tive period  and  the  other  the  complementary  operations  of  the 
fiscal  period,  together  with  a  table  of  totals,  etc. 

In  brief,  the  judicial  functions  of  the  Cour  des  Comptes 
with  regard  to  the  four  classes  of  accountable  officers  may  be 
recapitulated  as  follows : 

(i)     Accountable  officers  handling  cash    (comptables  en  Four 
deniers),  that  is,  all  accountable  officers  who  handle  public   ^f  Account- 
funds  ;  these  form  the  original  class.    Among  them,  the  chief   able 
accountable  officers  alone  submit  accounts  directly  to  the  Cour   Officers 
des  Comptes.     (Articles  316  and  321  of  the  decree  of  May  31,  Accountable 
1862.)     In  the  statements  of  the  chief  accountable  officers,   2^^!^ 
however,  are  included  the  operations  of  the  subordinate  ac-    ca^h  * 
countable  officers,  who  before  that  have  already  settled  their 
accounts  directly  with  their  superiors   (de  clerc  a  maitre) ; 
thus,  in  reality,  the  Conr  des  Comptes  passes  on  all  the  collec- 
tors of  public  funds.     In  the  same  way,  it  has  already  been 
explained,  the  treasurers  general  recapitulate  in  their  records 
all  the  operations  performed  by  the  special  collectors  and  the 
collectors. 

(2)  Accountable  oiUcers  handling  materials  {comptables  en  Account- 
matieres),  some  of  whom  are  passed  upon  by  the  Cour  des   ^^^^^^ 
Comptes,  such  as  the  accountable  officers  handling  stamps.    Handling 
money,  tobacco  and  matches,  postage  stamps,  etc.    The  others    Materials 
are  simply  controlled  by  the  Cour  des  Comptes,  for  instance, 

the  accountable  officers  in  the  arsenals,  the  powder  and  nitrate 
of  potassium  factories,  etc.  Excluded,  however,  from  the  ap- 
proval and  control  of  the  Cour  des^  Comptes  are  the  accounts 
of  materials  or  objects  classified  as  permanent,  such  as  furni- 
ture, pieces  of  art,  books,  etc.,  which  are  in  the  palaces,  build- 
ings, museums,  libraries,  etc.,  belonging  to  the  State.  Only 
accounts  of  materials  liable  to  be  used  up  are  submitted  to  this 
control. 

(3)  The  comptables  d' or dre,  which  includes  the  accounting 

patrimoniale  en  I4alie,"  an  excellent  chapter  in  the  work  of  M. 
Besson. 

.  563 


THE  BUDGET 


The 

Comptahles 

d'Ordre 


The 

Comptahles 
de  Fait 


The  Cour 
des  ' 
Comptes* 
One 

Hundred 
and 

Thirty- 
Five 
Members 


agent  of  the  general  ledger,  the  accounting  agent  of  transfers 
and  mutations,  the  accounting  agent  of  the  Navy  transports, 
the  accounting  agent  for  the  transfer  of  accounts,  the  account- 
ing agent  of  railroad  companies,  established  by  the  law  of 
May  30,  1899,  etc. 

(4)  Finally,  the  comptahles  de  fait,  which  means  individ- 
uals other  than  accountable  officers,  who,  without  authoriza- 
tion, interfere  in  the  handling  of  public  funds,  and  who,  as  a 
result  of  their  unofficial  work  {gestion  occnlte),  are  submitted 
to  the  same  jurisdictions  and  charged  with  the  same  responsi- 
bilities as  the  holders  of  actual  appointments.  (Article  25  of 
the  decree  of  May  31,  1862.) 

The  forms  of  accounts  to  be  submitted  by  these  various 
accountable  officers  have  been  previously  described.  As  stated, 
the  Cour  des  Comptes,  as  organized  by  the  law  of  1807,  now 
includes  135  members,  distributed  as  follows:  One  first  presi- 
dent, three  president  of  chambers,  eighteen  consulting  senior 
accountants  (or  six  per  chamber),  eighty-five  consulting  ref- 
erees of  the  first  and  the  second  classes,  twenty-five  auditors, 
one  attorney  general,  one  advocate  general,  one  registrar.  The 
decisions  can  be  revised  by  the  Cour  des  Comptes  itself,  either 
to  satisfy  the  demand  of  the  accountable  officers  under  certain 
conditions,  or  officially,  or  finally  upon  request  of  the  attorney 
general.  Finally,  in  case  of  violation  of  the  forms  or  of  the 
law,  the  accountable  officer  or  the  Minister  of  Finance  has  the 
right  to  make  an  appeal  to  the  Conseil  d'Etat  within  three 
months  after  being  notified  of  the  decision.  This  is  the  judi- 
cial control  exercised  by  the  Cot4/r  des  Comptes  over  the  ac- 
countable officers. 

Besides  this  judicial  control,  which  rests  on  the  findings  of 
the  Cour  des  -Comptes,  another  form  of  control  permits  the 
Cour  des  Comptes  to  go  as  far  as  the  ordonnatetirs  and  to  co- 
operate in  the  legislative  work,  as  will  be  shown  in  the  follow- 
ing chapter. 


564 


CHAPTER  XXIX 
CONTROL  OVER  THE  ORDONNATEURS 

The  Ordonnateurs  Escape  Control;  Fraud  Almost  Impossible;  Mont- 
cloux's  Proposal;  Need  of  Legislative  Control. 

Accounts  of  Ministers:  Each  One  Submits  an  Account;  Reports  to 
Be  in  Detail;  A  Definite  Statement  of  Revenues;  A  General  State- 
ment of  Finances ;  Three  Divisions  in  the  General  Statement ;  The 
Accounts  Prepared  by  Subject;  The  General  Statement;  The 
Account  Prepared  by  Division;  The  Statement  of  Statistics. 

Commission  for  the  Verification  of  the  Accounts  of  the  Ministers: 
The  Commission — How  Composed;  Method  of  Checking  Reports. 

General  Reports  of  the  Cour  des  Comptes:  They  Are  Two  in  Num- 
ber; Processes  Pursued. 

Annual  Report  of  the  Cour  dcs  Comptes:  Its  Purpose;  The  Cour 
des  Comptes'  Place;  Difficulties  Overcome;  Victory  Final  in  1832; 
Annual  Reports  to  the  Legislature;  Reports  Are  Exhaustive;  The 
Control  Is  Far-Reaching. 

Cour  des  Comptes  or  Analogous  Institutions  in  Other  Countries: 
The  Comptroller  and  Auditor  General;  Russia  Has  Minister  of 
Control;  The  Russian  and  the  French  Systems;  The  Superior 
Prussian  Chamber  of  Accounts;  The  Cour  des  Comptes  in  Belgium 
and  Italy;  The  Italian  System  if  Applied  in  France;  A  Recent 
Case  in  Point;  The  Accounts  of  Ministers  in  Italy;  Characteristics 
of  the  French  Cour  des  Comptes;  Proposed  New  Functions. 

The  ordonnateurs,  as  we  have  seen,  escape  administrative  The  Or- 
control,  because,  being  the  ministers  themselves,  they  have  no  ^""^^^"^^ 
superiors.    As  far  as  judicial  control  is  concerned,  Article  18   control 
of  the  law  of  September  16,  181 7,  already  quoted,  excludes 
them  formally  from  such  control.     "While  the  control  over 
accountable  officers  is  increased  all  the  while,  the  ordonnateurs 
are  permitted  to  move  about  independently  and  sometimes  in 
an  insolvent  condition.    The  instrument  is  passed  on,  but  not 
the  hand  which  wields  it.     A  mistake  of  one  cent  in  the  ad- 
ministration of  an  accountable  officer  is  pitilessly  taken  up. 
The  administration  of  the  ordonnateur  is  exempt  from  exami- 
nation :  the  greatest  mistakes  and  the  most  fraudulent  prac- 
tices can  be  committed  in  the  liquidations  without  financial 
justice  deeming  it  necessary  to  interfere." 

565 


THE  BUDGET 


Fraud 

Almost 

Impossible 


Montcloux's 
Proposal 


De  Montcloux,  former  cashier  of  the  Treasury/  thus  ex- 
pressed himself  in  1840,  using  language  obviously  exagger- 
ated ;  because  the  ordonnateiirs  cannot,  as  Montcloux  claimed, 
commit  the  most  fraudulent  practices  with  impunity  and  with- 
out being  prosecuted  or  penalized.  First,  the  decree  on  ac- 
counting of  May  31,  1862,  says  expressly:  ^'Article  35.  The 
administrators  are  responsible  for  the  exactness  of  the  instru- 
ments they  issue."  Articles  174,  175  and  177  of  the  penal 
code  emphasize  this  responsibility.  Furthermore,  in  the  very 
nature  of  things  the  falsifying  ordonnateur  becomes  mixed  up 
to  a  greater  or  lesser  degree  in  his  accounts ;  he  takes  funds, 
hides  them  away,  and  organizes  a  secret  administration,  and 
this  actually  maJces  an  accountable  officer  of  him  when  he  is 
discovered.  Administrative  pressure  bears  down  on  him  and 
grips  him  pitilessly  until  a  receipt  in  due  form  (quitus)  liber- 
ates him.  *'The  unofficial  administration  (gestion  ocailte)  is 
submitted  to  the  same  jurisdiction  and  involves  the  same  re- 
sponsibility as  the  open  administration."  (Article  25  of  the 
decree  of  May  31,  1862.)  The  alleged  impunity  of  which 
Montcloux  speaks  is  not  complete,  as  we  see.  It  is  a  fact, 
however,  that  the  ordonnateiirs  are  not  examined.  "Officers 
have  the  right  to  open  the  treasuries  by  their  simple  signature, 
and  these  men  are  not  judged  because  of  the  fact  that  they 
have  availed  themselves  of  this  right,"  says  a  more  recent 
document.  (Bill  on  parliamentary  initiative  of  November  18, 
1882.) 

What  Montcloux  would  have  liked  to  see  disappear,  before 
all  else,  is  the  fiction  of  ministerial  responsibility  which  covers 
the  actions  of  the  chiefs  of  the  service,  rendering  them  almost 
safe  from  attack.  For  this  purpose  he  suggested  a  distinc- 
tion between  responsibilities,  in  order  that  they  shall  not  fix 


^  The  work  of  M.  de  Montcloux  under  the  title :  De  la  compta- 
hilite  publique  en  France,  Paris,  1840,  says  in  another  connection: 
"The  payment  is  a  complicated  matter;  an  account  for  the  payment 
must  be  demanded  from  more  than  one  agent.  Let  us  not  run  the 
risk  of  seeing  an  ordonnateur  delivering  false  pay-warrants  for 
travelling  expenses  to  supposed-to-be  military  men,  another  fabricat- 
ing pay-warrants  for  priests  who  do  not  exist,  or  another  supplying 
funds  to  a  manager,  who  in  turn  applies  them  for  his  personal  ex- 
penses ...  all  these  officers  whose  negligence  is  tantamount  to  pecu- 
lation protect  themselves  with  their  dignity,  which  is  immune  from 
attack.  .  .  .  The  ordorinateurs  should  be  responsible  for  what  they 
do.    If  they  have  done  wrong,  they  should  be  brought  to  trial." 

566 


CONTROL  OVER  THE  ORDONNATEURS 

themselves  on  the  minister  himself,  where  they  stop  and  be- 
come void. 

"Let  us  separate,  first,"  he  said,  "the  action  of  the  min- 
ister from  the  action  of  his  subordinate.  Let  us  declare 
that  the  minister  is  not  personally  responsible  for  v^hat 
happens  below  him.  Let  us  say  for  what  he  is  responsi- 
ble, and  let  us  specify  the  responsibility  of  his  agents. 
By  this  means,  the  question  will  become  clear  and  possi- 
bly very  simple.  .  .  .  Where  would  we  have  been,  I  ask, 
if  the  reasoning  with  regard  to  the  accountable  officers 
had  been  the  same  as  it  has  been  hitherto  with  regard  to 
the  ordonnateiirsf  Of  course  the  Minister  of  Finance 
could  not  have  been  made  responsible  for  illegal  collec- 
tions or  for  the  embezzlement  of  funds ;  it  was  impossible 
to  think  of  that.  .  .  .  Responsible  agents  have  therefore 
been  appointed  in  all  possible  grades,  and  secure  as  well 
is  firm  guarantees  have  been  taken  against  them  and  their 
property.  The  same  thing  that  has  been  done  with  re- 
gard to  the  ministry  which  receives  the  money,  can  be 
done  with  those  who  disburse  it." 

The  solution  suggested  above  appears  to  be  too  radical.  It  Need  of 
is  impossible  to  think  of  demanding  a  bond  of  all  chiefs  of  the  controT^^ 
service,  nor  can  all  civil  and  military  administrators  be  re- 
leased on  the  basis  of  documents  passed  upon  by  the  Cour  des 
Cornptes}  The  necessity  for  a  serious  and  efficacious  legisla- 
tive control — if  such  control  is  the  only  one  to  which  the  or- 
donnateurs  can  be  subjected — results  obviously  from  the  con- 
siderations explained  above. 

Accounts  of  Ministers 

A  necessary  element  of  every  system  of  control  is  a  state- 
ment prepared  by  the  individual  performing  the  operations 
(tittdaire  des  operations)  to  be  verified.    As  a  result  thereof, 

1  The  commission  on  the  revision  of  the  decree  of  May  31,  1862, 
when  studying  the  question  of  the  responsibility  of  the  ordonnateurs, 
discarded  every  idea  of  pecuniary  responsibiHty  as  far  as  the  ordon- 
nateurs were  concerned.  Disciplinary  punishments,  reduction  in  rank, 
transferring  to  another  post,  putting  on  the  waiting  list  {mise  en 
disponihilite),  dismissal,  were  deemed  by  the  commission  as  the  only 
acts  of  repression  which  correspond  to  the  position  and  the  functions 
of  the  ordonnateurs, 

S^7 


THE  BUDGET 

Each  One       the  ministers  submit  annually  to  the  legislature  the  following 
Account^"     accounts:     (i)  Definite  account  of  expenditures ;  (2)  definite 
account  of  revenues;  (3)  general  account  of  finances. 

The  law  of  April  28,  181 6,  was  the  first  to  specify  require- 
ments on  this  subject.  ''Article  122.  The  accounts  of  expendi- 
tures of  each  ministry  shall  be  printed."  Later,  the  law  of 
March  25,  1817,  in  Section  XII,  under  the  heading,  ''Pro- 
visions as  to  accounts  to  be  submitted  to  the  chambers,"  re- 
newed and  developed  the  order  given  to  the  ministers  to  sub- 
mit at  each  session  a  printed  report  on  their  operations  during 
the  previous  year  (Article  148).  Article  150  of  the  same  law 
specifies  the  data  which  must  be  contained  in  these  accounts. 

"The  disbursing  ministers  of  all  the  departments  shall 
present  reports  on  the  expenditures  which  they  have  made 
in  the  course  of  their  administration,  and  they  must  com- 
pare these  reports  with  the  payment  vouchers  which  they 
have  issued  during  the  same  period  and  with  the  special 
appropriations  for  each  chapter  of  their  budgets." 

The  law  of  May  15,  1818 — establishing  the  law  of  annual 
regulation  for  the  operations  of  each  fiscal  period — also  pro- 
vides that  the  accounts  submitted  by  the  ministers  shall  be 
attached  as  substantiating  documents,  and  as  an  exhibit  of  this 
law  of  regulation.  Finally,  the  ordinance  of  December  10, 
1823 — 'by  which  de  Villele  completed  his  ordinance  on  account- 
ing of  September  14,  1822 — outlined  an  exact  program  of 
subjects  to  be  contained  in  the  reports  of  the  ministers  ^  and 
organized  besides  a  commission,  of  which  we  shall  soon  speak, 
charged  with  verifying  them. 
Reports  to  As  we  have  seen,  the  disbursing  ministers  of  each  depart- 

DetaH  ment,  by  virtue  of  these  successive  provisions,  are  required  to 

publish  annually  definite  reports  of  their  expenditures  during 
the  preceding  fiscal  period ;  these  reports — prepared  according 
to  forms  prescribed  by  regulations,^  printed  and  distributed  in 
the  chambers — must  constitute  the  substantiating  elements  of 

*  Provisions  reproduced  in  the  decree  of  May  31,  1862,  Article  160. 

2  The  definite  accounts  of  expenditures  of  every  ministry  are  divided 
as  follows,  and  their  division  gives  a  sufficient  idea  as  to  their  con- 
tents: (i)  Appropriations  made;  (2)  expenditures  resulting  from 
works  performed;  (3)  payments  disbursed  on  the  basis  of  payment 
vouchers;  (4)  balances  to  be  paid;  (5)  appropriations  exceeding 
the  expenditures;  (6)  appropriations  not  used  up,  to  be  annulled  or 
carried  forward;  (7)  definite  appropriations  of  the  fiscal  period. 

568 


CONTROL  OVER  THE  ORDONNATEURS 

the  bill  for  the  regulation  of  the  budget.  Schedules,  the  in- 
sertion of  which  has  been  prescribed  by  various  laws,  must 
be  attached  to  these  accounts,  for  instance,  tables  exhibiting 
the  closed  fiscal  period,  annulled  appropriations,  disbursed  pay- 
ments, etc.  (Law  of  May  23,  1834) — schedules  showing  resi- 
dences given  in  state  buildings  (Law  of  April  23,  1883) — ^an 
enumeration  of  tobacco  licenses  (Law  of  July  27,  1870) — a 
list  of  students  holding  scholarships  in  the  various  educational 
institutions,  etc.  Furthermore,  the  Minister  of  Finance  pub- 
lishes two  reports,  which  bear  entirely  upon  his  competent 
sphere,  viz. :  A  definite  statement  of  revenues  and  a  general  A  Definite 
statement  of  finances.  The  statement  of  revenues  presents  „£ ^^"^"ups 
the  exact  figure  of  taxes  collected  and  assessed  (droits  pergus 
ct  constates)  in  the  course  of  the  fiscal  period,  and  also  for 
reasons  of  control  and  of  statistics,  an  enumeration  of  the 
securities,  materials  and  quantities,  to  which  the  tariffs  were 
applied.  Article  149  of  the  law  of  March  25,  1817,  prescribes: 
"The  Minister  of  Finance  shall  present  ...  (4)  An  account 
of  the  collection  of  gross  proceeds  of  direct  and  indirect  • 
taxes." 

General  Statement  of  Finances:  The  general  statement  of 
finances  requires  a  longer  explanation.  It  is  contained  in  two 
quarto  volumes  of  about  one  thousand  pages  and  is  respectable 
not  only  because  of  its  bulky  appearance,  but  also  because  of 
its  contents.*  Prior  to  the  law  of  March  25,  181 7,  which  gave 
it  its  present  form  (Article  149)  there  had  been  two  annual 
accounts  from  the  year  VII  of  the  Republic  [1798-1799]; 
one  was  the  account  of  the  Treasury,  the  other  the  account  of 
finances ;  both  were  published  simultaneously  by  the  Ministers 
of  the  Treasury  and  of  Finance  respectively.  Beginning  with 
18 1 7,  the  general  account  of  finances  came  to  be  the  only  one 
in  existence ;  but  as  it  included  more  and  more  supplementary 
information,  it  was  divided  into  two  volumes.  In  order  to  re- 
duce the  description  of  the  subjects  which  these  books  contain, 
instead  of  following  the  preliminary  notice  which  is  placed  at 
the  beginning  of  the  yearly  issue  of  the  general  statement  of 
finances — and  which  sets  out  a  complete  list  of  its  general  ac- 

1  Because  of  a  recent  innovation,  the  Minister  of  Finance  publishes 
a  Summary  {Resume)  of  the  general  account,  which  summary  has 
about  130  pages  and  follows  the  large  general  account,  which  always 
consists  of  two  volumes  in  quarto. 


THE  BUDGET 

counts  and  special  accounts — let  us  limit  ourselves  ^  to  com- 
menting on  the  following  heads :  ( i )  Account  of  the  ad- 
ministration for  the  elapsed  year,  presented  by  character  of 
operations  and  by  the  divisions  of  the  fiscal  period;  (2)  same 
account  prepared  by  the  divisions  of  accountable  officers;  (3) 
numerous  statistical  information. 


The 

Accounts 
Prepared 
by   Subject 


The 

General 

Statement 


Three  Divisions  in  the  General  Statement:  i.  The  state- 
ment prepared  by  character  of  operations  includes,  like  the 
reports  of  the  accountable  officers  themselves,  the  total  of  oper- 
ations performed  between  January  i  and  December  31,  cover- 
ing the  operations  of  the  first  year  of  the  fiscal  period  and  the 
complementary  operations  for  the  preceding  fiscal  period.  The 
condition  of  the  Treasury  at  the  beginning  and  at  the  end  of 
the  year,  opens  and  closes  the  records.^  "The  general  state- 
ment of  the  administration  of  finances  again  traces  the  move- 
ments of  the  year  and  the  condition  of  all  the  financial  activi- 
ties of  the  State  at  the  beginning  and  at  the  end  of  the  year.'* 
Owing  to  the  division  of  the  fiscal  periods,  which  is  main- 
tained in  the  annual  report,  this  first  account  makes  it  possi- 
ble to  reestablish  the  link  which  must  exist  between  the  ac- 
counts of  the  year  and  the  accounts  of  the  fiscal  period.  Al- 
ready we  have  seen  that  the  accountable  officers  operate  by 
administrative  periods  and  the  ordonnateurs  by  fiscal  periods.^ 
It  was,  therefore,  necessary  to  bring  their  operations  closer 
together  in  order  to  control  them  reciprocally.  The  means  to 
do  this  are  furnished  by  the  general  statement. 

"The  exactness  of  the  statements  of  the  fiscal  period 
may  be  fully  demonstrated  only  by  their  agreement  with 
the  accounts  of  revenues  and  expenditures.  It  is  neces- 
sary to  correlate  those  sections  regulated  by  administra- 
tive period  and  those  regulated  by  fiscal  period,  in  order 
to  pass  from  one  to  the  other  for  the  purpose  of  con- 

^  According  to  the  preliminary  notice  (note  preliminaire) ,  the  gen- 
eral statements  are  composed  of  six  parts:  (i)  Account  of  the  opera- 
tions of  the  year;  (2)  account  of  the  public  taxes  and  revenues; 
(3)  account  of  public  expenditures;  (4)  account  of  the  treasury; 
(5)   account  of  the  budgets;   (6)   general  condition  of  finances. 

2  The  general  statement  of  finances,  developing  the  budgetary 
operations  and  the  operations  of  the  Treasury  in  the  course  of  the 
year,  balances  with  totals  of  from  47,000,000,000  to  48,000,000,000 
for  the  revenues  and  the  expenditures. 

3  Chapter  V. 

570 


CONTROL  OVER  THE  ORDONNATEURS 

trolling  them."     (Statement  of  Beranger,  Commissioner 
of  the  King,  1819.) 

The  general  statement — by  adding  the  totals  of  the  first 
part  of  the  administrative  period  to  the  totals  of  the  comple- 
mentary portion  at  the  beginning  of  the  following  year — shows 
the  fiscal  period  complete.  The  account  of  the  budgets 
(Compte  des  budgets)  is  prepared  in  the  same  way. 

2.  Another  series  of  documents  distributes  the  operations   The 
of  accountable  officers  by  divisions/  which  is  a  new  method  Recount 

.  1  •'.......  .  Frepared 

of  presentmg  the  statement  mtended  to  facilitate  a  comparison  by  Division 
of  the  ministerial  accounts  with  the  decisions  issued  by  the 
Cbur  des  Comptes.  The  legislative  control — established  by 
the  ordinance  of  September  14,  1822,  of  which  we  shall  soon 
speak — has  left  considerable  difficulties  with  regard  to  their 
execution ;  the  Cour  des  Comptes  was  lost  in  a  mass  of  figures, 
which  it  was  supposed,  without  having  a  guiding  mark,  to 
compare  with  the  totals  of  accounts  from  all  the  accountable 
officers  subject  to  its  jurisdiction.^  In  order  to  help  the  Cour 
des  Comptes,  the  ordinance  of  July  9,  1826,  issued  at  sugges- 
tion of  de  Villele,  ruled  to  segregate  henceforth,  the  annual 
operations  by  divisions  of  accountable  officers  in  conformity 
with  the  order  contained  in  the  decisions  of  the  Cour  des 
Comptes.  The  latter,  guided  at  each  step,  was  able  to  finish 
the  work  safely,  as  we  shall  see.  And,  too,  the  ordinance  of 
1826  ordered  the  Minister  of  Finance  to  deposit  annually  with 
the  registrar's  office  a  general  statement  of  transfers  of  ac- 

1  The  majority  of  treatises  and  the  decree  of  May  31,  1862,  failed 
to  mention  this  second  part  of  the  general  statement.  The  reason 
for  this  is  that  they  limited  themselves  to  reproducing  slavishly  the 
original  divisions  outlined  by  the  ordinance  of  December  10,  1823, 
which  obviously  could  not  mention  the  provisions  inaugurated  by  the 
ordinance  of  July  9,  1826,  in  reference  to  the  sub-division  of  records 
by  classes  of  accountable  officers.  The  drafters  of  the  decree  of 
regulation  of  1862,  while  compiling  the  old  texts,  should  have  under- 
taken to  bring  them  up-to-date. 

2  Collectors  of  the  administration  of  registration,  collectors  of  the 
administration  of  stamps  and  of  domains,  collectors  of  customs,  col- 
lectors of  indirect  taxes,  collectors  of  the  administration  of  posts 
and  telegraphs,  the  accounting  agents  of  the  national  savings  bank, 
the  treasurers  general  of  finances,  the  central  paying  cashier  of  the 
public  treasury,  the  paymaster  of  the  public  debt,  Army  paymasters, 
the  accounting  agents  of  the  Naval  works,  accountable  agents  of 
finances  in  Algiers,  treasurers  of  the  ccrlonies,  the  accounting  agent 
of  the  transfers  of  accounts. 

571 


THE  BUDGET 

counts  in  order  that  the  Cour  dcs  Comptes  might  be  able  to 
change  its  own  records  to  conform  with  the  changes  in  the 
accounts  of  the  ministries.  A  special  agent  certifies  under  his 
own  responsibility  as  to  this  final  harmonizing  of  accounts. 
The  2,.  Finally,  in  the  class  of  statistical  documents  there  must 

of^Stadons  ^  cited  reports  which  do  not  form  part,  as  do  the  preceding 
ones,  of  the  official  series  of  legislative  control  measures,  but 
which  none  the  less  are  of  considerable  interest.  Some  of 
these  are  included  by  virtue  of  legislative  provisions.  The 
main  documents  are :  Account  of  the  public  debt  as  to  princi- 
pal and  interest  (recapitulating  the  successive  making  of 
loans  ^i  5,  4>^,  4,  3^  and  3  per  cent),  their  conversions, 
their  amortizations,  the  number  of  holders  of  bonds  to  order 
{rentes  nominatives) ,  or  bearer  bonds,  etc.;  account  of  mon- 
eys, stating  the  totals  of  gold  and  silver  pieces  by  effigy  and 
by  diameter,  minted  since  1795,  etc.;  the  schedules  of  the 
movements  of  the  dccouverts  of  the  Treasury,  of  the  special 
operations,  of  the  assets  and  liabilities  of  the  Treasury,  of 
fluctuations  of  the  floating  debt,  etc. ;  table  relating  to  closed 
fiscal  periods,  prescribed  by  Article  10  of  the  law  of  May  23, 
1834;  accounts  of  3  per  cent  sinking  fund  bonds,  of  annual 
subsidies  for  railroad  companies,  of  the  .guarantee  of  interest, 
of  cash  bonds,  of  civil  pensions,  of  debits  and  claims  in  litiga- 
tion, of  the  ancient  extraordinary  domain,  of  the  contributions 
(fonds  de  concours),  from  the  local  administration  of  the 
colonies,  etc. 

In  brief,  the  general  statement  of  the  administration  of 
finances  may  be  defined  as  follows : 

"A  document  published  annually  by  the  ministry  of 
finances,  which  recapitulates  the  operations  of  all  the 
budgetary  services  in  revenues  and  expenditures  from 
January  i  until  December  31,  'distinguishing  the  fiscal 
periods  and  the  divisions  of  accountable  officers,  and  also 
containing  numerous  accounting  data  or  statistical  infor- 
mation on  the  main,  financial  activities." 

Commission  for  the  Verification  of  the  Accounts  of 
THE  Ministers 

To  what  control  is  the  material  thus  presented  submitted? 
In  the  first  place,  the  ordinance  of  December  10,  1823,  es- 
tablished an  annual  commission  designated  by  the  name  of 

572 


CONTROL  OVER  THE  ORDONNATEURS 

Commission  for  the   Verification   of  Accounts  of  Ministers, 

and  composed  of  nine  members  selected  by  the  Chief  Executive 

from  the  Senate,  the  Chamber  of  Deputies,  the  Conseil  d'Etat  The  Com- 

and  the  Cour  des  Comptcs;  ^  this  commission  was  charged  with   ho^*°"~ 

comparing  the  results  shown  in  the  journal  and  in  the  ledger  Composed 

of  the  ministry  of  finances,  with  the  accounts  pubHshed  by 

the  ministers,  and  of  checking  the  latter  with  the  main  records 

kept  in  each  of  the  ministerial  departments. 

The  essential  object  of  this  work  consisted  in  ascertaining 
on  the  spot  that  the  statements  of  expenditures  and  of  reve- 
nues and  of  the  general  account  of  finances  agreed  with  the 
records  of  the  bureauof  general  accounting  of  finances  and  of 
the  central  accounting  bureau  of  each  ministry.  According 
to  the  wording  of  one  of  these  minutes,  the  commission  **has 
charge  of  showing  that  the  results  presented  by  the  ministerial 
accounts  are  the  exact  expression  of  the  facts." 

As  far  as  the  definite  accounts  of  expenditures  submitted  by  Method  of 
each  disbursing  minister  were  concerned,  the  commission  at  RgporJ"^ 
first  passed  on  their  regularity.  It  did  the  same  with  regard 
to  the  definite  accounts  of  revenues  and  the  general  statement 
of  finances,  whereby  the  latter  attracted  particular  attention. 
Then  the  commission  proceeds  to  examine  the  primary  records 
from  which  these  accounts  were  extracted.  The  commission 
balances  the  journal  and  the  ledger  of  the  public  accounting 
bureau,  ascertains  that  the  journal  tallies  with  the  secondary 
books,  that  it  contains  the  exact  summary  of  accounts  drawn 
up  on  the  basis  of  the  records  of  the  accountable  officers;  it 
ascertains,  furthermore,  that  the  ledger  of  the  public  account- 
ing bureau  reproduced  all  the  results  shown  in  the  journal. 
Finally,  when  the  bases  of  verifications  are  ascertained,  the 
commission  compares  them  with  the  documents  previously 
enumerated;  the  commission  is  then  in  a  position  to  certify 
in  its  minutes  that  all  are  in  agreement,  which  minutes  are 
printed  and  officially  communicated  to  the  Minister  of  Finance, 
to  the  Senate  and  to  the  Chamber  of  Deputies. 

In  the  course  of  its  work,  the  commission  also  closes  the 
books  of  the  funded  debt,  the  statements  of  debits  and  claims, 


^  The  ordinance  of  December  lo,  1823,  constituted  this  commission 
only  of  the  members  of  the  Conseil  d'Etat  and  of  the  Cour  des 
Comptes.  The  ordinance  of  December  8,  1830,  introduced  into  this 
commission  members  of  the  two  chambers  in  order  to  give  parlia- 
mentary guarantees  to  the  operations  of  the  commission  in  question. 

573 


THE  BUDGET 

the  collection  of  which  was  entrusted  to  an  agent  of  the  Treas- 
ury, and  the  general  accounts  of  materials  of  each  ministry. 

General  Reports  of  the  Cour  des  Comptes 


They  Are 
Two  in 
Number 


Processes 
Pursued 


The  extra-parliamentary  commission  is  then  succeeded  by 
the  Cour  des  Comptes,  which  exercises  its  authority  by  means 
of  the  publicity  given  to  two  publications  growing  automati- 
cally out  of  its  accounting  work.  These  publications  are :  The 
General  Statement  as  to  Conformity  and  the  Annual  Report 
to  the  Chief  Executive.  Let  us  study  first  the  general  state- 
ment, which  the  ordinance  of  September  14,  1822,  established 
in  the  following  phrase :  "The  Cour  des  Comptes  shall  ascer- 
tain and  certify  on  the  basis  of  the  statements  of  individual 
accounts,  the  correctness  of  the  general  accounts  published  by 
the  Minister  of  Finance  and  by  each  disbursing  minister." 

The  Cour  des  Comptes,  in  fact — after  having  passed  on  the 
reports  of  all  the  accountable  officers  in  the  form  described 
above — derives  figures  of  absolute  certainty  on  the  subject  of 
budgetary  operations;  the  Cour  des  Comptes  has  only  to  re- 
capitulate them  in  order  to  control — without  error  or  possi- 
bility of  doubt — the  statements  submitted  by  the  ministers. 
The  ordinance  of  September  14,  1822,  ruled  that  the  Cour  des 
Comptes  should  compare  the  totals  of  figures  ascertained  by 
its  work  with  the  totals  of  the  accounts  of  ministers.  From 
this  results  the  General  Statement  as  to  Conformity.  These 
general  declarations  are  of  two  kinds:  One  relates  to  the 
accounts  of  the  annual  administration,^  specially  directed  at 
the  records  of  the  general  statement  of  finances  which  is  kept 
by  administrative  periods ;  the  other  relates  to  the  condition  of 
the  expired  fiscal  period  ^  and  aims  at  certifying  to  the  con- 

^  The  general  declaration  on  the  accounts  of  the  year  has  the 
following  legend:  "The  Cour  des  Comptes  .  .  .  ,  provided  .  .  .  , 
under  the  reservations  expressed  above,  declares:  (i).That  the  gen- 
eral statement  of  the  administration  of  finances  for  the  year  .  .  . 
agrees  .  .  .  with  the  decisions  passed  on  the  individual  accounts  sub- 
mitted by  the  accountable  agents  of  finances  for  the  year  in  question." 

2  General  declaration  on  the  definite  situation  of  the  fiscal  period 
has  the  following  legend :  "The  Cour  des  Comptes  .  .  .  ,  having  duly 
examined  .  .  .  ,  in  consideration  .  .  .  ,  declares:  That  the  revenues 
and  the  expenditures  included  in  the  accounts  of  the  ministers  for  the 
fiscal  period  .  .  .  tally  with  the  results  of  decisions  passed  on  the  cor- 
responding operations  which  are  stated  in  the  accounts  of  the  account- 
able agents  of  finances,  unsupported  by  substantiating  documents 
which  serve  as  their  proofs." 

574 


CONTROL  OVER  THE  ORDONNATEURS 

» 

formity  of  the  accounts  of  the  disbursing  ministers  with  those 
of  the  accountable  officers.  Although  the  first  is  kept  by  fiscal 
periods  and  the  other  by  administrative  periods,  the  divisions 
of  the  annual  accounts — presenting  separately,  as  we  know, 
the  operations  of  the  two  parts  of  the  fiscal  period — make  it 
possible  to  pass  with  certainty  from  the  administrative  period 
to  the  fiscal  period.  The  Coiir  des  Comptes  can,  therefore, 
declare  the  agreement  of  its  individual  decisions  passed  on  the 
administration  of  the  accountable  officers,  with  the  figures  of 
the  statements  of  the  vouchering  ministers,  just  as  it  did  with 
regard  to  the  general  statement  of  finances. 

The  ordinance  of  July  9,  1826,  smoothed  down  certain  diffi- 
culties, as  has  been  explained,  by  compelling  the  administra- 
tion of  finances  to  prepare  its  statements  by  the  divisions  of 
accountable  officers,  the  partial  totals  of  which  would  serve  to 
guide  the  Cour  des  Comptes  in  the  recapitulation  ^  of  its  de- 
cisions, and  to  prepare  a  table  of  transfers  of  accounts  which 
would  permit  of  their  being  checked  by  common  agreement 
•  against  the  original  charges.  The  Cour  des  Comptes,  there- 
fore, issues  with  perfect  security  its  two  general  statements 
(for  the  year  and  the  fiscal  period),  which — after  being  sub- 
mitted to  the  Minister  of  Finance,  printed,  and  communicated 
to  the  chambers  ^ — serve  as  substantiating  documents  for  the 
bill  regulating  the  budget. 

Annual  Report  of  the  Cour  des  Comptes 

The  law  of  September  16,  1807,  authorized  **the  referees  to 
take  notice  of  the  observations  which  result  from  study  of  the 
revenues  in  relation  to  the  laws,  and  of  expenditures  in  rela- 
tion to  appropriations."  (Article  20.)  By  means  of  these 
memoranda  of  the  referees : 

"The  prince  arch  treasurer  shall,  in  January  of  each   its  Purpose 
year,  suggest  to  the  emperor  the  selection  of  four  com- 
missioners who  shall  form,  together  with  the  first  presi- 
dent, a  special  committee  charged  with  examining  the 

^  See  what  has  been  said  on  the  subject  with  regard  to  the  general 
statement  of  finances  in  which  were  inserted  the  two  documents 
quoted  above. 

2  The  order  of  November  22,  1848,  compelled  the  Minister  of 
Finance  to  have  the  general  declaration  printed  and  communicated 
to  the  National  Assembly. 

575 


THE  BUDGET 

observations  made  during  the  preceding  year  by  the  ref- 
erees. This  committee  discusses  these  observations,  dis- 
cards those  which  it  does  not  deem  well  founded,  makes 
other  observations  the  basis  of  a  report  which  it  submits 
through  the  president  to  the  prince  arch  treasurer,  who 
in  turn  communicates  it  to  the  emperor."     (Article  22.) 

This  routine  was  merely  to  inform  the  emperor,  personally, 
as  to  the  management  of  the  ordonnateurs.  "Above  all,  act  in 
such  a  way  that  I  shall  be  informed  of  everything.  The  em- 
peror confined  in  his  palace  can  know  only  what  people  are 
willing  to  tell  him.  The  Coiir  dcs  Comptcs  will  inform  me," 
said  Napoleon.  It  was  a  far  cry  from  this  confidential  report 
to  the  public  report,  printed  and  distributed  to  the  chambers, 
as  was  ordained  by  the  laws  of  18 19  and  1832. 

In  181 9,  in  fact,  the  law  of  June  27  stipulated :    "Article  20. 

An  annual  statement  of  finances  shall  be  accompanied  by  a 

schedule  giving  report  of  the  work  done  by  the  Cour  des 

Comptcs."    The  discussion,  which  preceded  the  insertion  of  • 

The  Cour      this  text,  illustrates  much  better  than  its  words  the  intention 

^"       ,        of  the  legislature  to  make  the  Cour  dcs  Comptcs  an  adjunct 

pface  "         of  the  legislative  power  by  requiring  periodical  reports  of  its 

work. 

"The  Cour  des  Comptes  is  not  united  to  the  chambers 
by  any  tie ;  the  result  of  its  work  is  not  communicated  to 
the  chambers  at  all.  The  institution — which  could  best 
be  devised  to  secure  the  public  interest,  to  supervise  the 
expenditures,  in  the  last  analysis — deals  only  with  mis- 
takes as  to  dates  or  as  to  calculations,  or  mutilated 
names,  or  life  certificates,  or  receipts  or  imperfect  war- 
rants. Through  wise  legislative  provisions,  the  Cour  des 
Comptes  will  become  one  of  the  most  useful  instruments 
of  order,  control  and  supervision."  (Report  on  the  bill 
of  regulation  of  the  fiscal  period,  181 5,  1816  and  181 7  by 
Deputy  Roy.) 

"In  order  fully  to  empower  the  Cour  des  Comptes  and 
to  establish  between  it  and  the  chambers  the  connection 
which  should  properly  exist,  it  will  be  necessary  that  the 
commission — which  by  virtue  of  the  law  of  1807  has  to 
proceed  with  the  examination  of  the  memoranda  con- 
taining observations — combine  its  memoranda  with  the 
schedule  showing  the  work  done  by  the  Cour  des  Comptes, 

576 


CONTROL  OVER  THE  ORDONNATEURS 


in  order  that  both  shall  be  made  public  and  distributed  to 
the  chambers."  (Speech  of  M.  Chauvelin,  May  lo, 
1819.) 

*'The  functions  of  the  Cour  des  Comptes  shall  not  be 
limited  to  judging  separately  the  accounts  submitted  to  it 
by  the  agents  of  the  departments  for  revenues  and  ex- 
penditures. .  .  .  The  organization  of  the  Cour  des 
Comptes  must  be  in  harmony  with  the  form  of  our  gov- 
ernment, in  order  to  derive  from  this  institution  all  the 
advantages  to  be  expected."  (Speech  of  M.  Bignon, 
May  II,  1819.) 

As  the  text  of  the  law  of  1819  did  not  clearly  express  the 
intentions  of  its  protagonists,  the  reports  of  the  Cour  des 
Comptes  "were  lost  in  the  library  of  the  keeper  of  the  seals, 
who,  after  1815  had  occupied  the  place  of  the  arch  treasurer." 
The  legislative  committees  in  vain  demanded  these  reports; 
the  Government  always  found  some  pretext  for  the  postpone- 
ment of  their  production  and  to  prevent  their  crossing  the 
threshold  of  the  legislature.  In  1829,^  Deputy  de  Schonen 
formulated  a  bill  requiring  that  these  reports  be  printed  and 
distributed. 

''Strange  anomaly !"  he  said.  "Everything  is  published, 
the  jiccounts  of  the  ministers,  accounts  of  finances,  ac- 
counts of  the  sinking  fund,  the  reports  of  various  com- 
missions. Only  one  report  is  not  printed.  What  am  I 
saying?  It  is  not  even  communicated  to  you;  and,  under 
the  most  futile  pretexts,  your  commissions  are  compelled 
to  do  without  it.  However,  this  is  the  report  of  an  inde- 
pendent body  on  the  general  accounting  of  the  kingdom, 
a  work  which  more  than  anything  else  should  enter  into 
your  considerations,  thus  enabling  you  with  full  knowl- 
edge to  act  in  the  great  matter  of  the  budget."  (Session 
of  May  20,  1829.) 

The  suggestion  of  M.  de  Schonen,  having  failed  in  the 
Chamber  of  Deputies  in  1829,  was  taken  up  by  M.  Taillandier 
in  1832,  in  the  course  of  the  discussion  on  the  budget.     The 

^  In  1828,  Deputy  Augustin  Peper,  who  reported  on  the  law  of 
regulation  of  the  budget  for  1826,  demanded  that  the  work  done  by 
the  Cour  des  Comptes  be  submitted.  An  amendment  along  the  same 
lines  was  submitted  by  Bignon  at  the  time  of  the  general  discussion. 
Neither  of  these  suggestions  brought  results. 

577 


Difficulties 
Overcome 


Victory 
Final 
in   1832 


THE  BUDGET 

suggestion  was  adopted,  but  not  without  opposition;  because 
even  M.  de  Schonen,  who  had  become  attorney  general  at  the 
Cour  des  Comptes,  energetically  fought  it,  in  spite  of  M.  Tail- 
landier  introducing  verbatim  M.  de  Schonen's  own  suggestion 
of  1829.  It  was  useless  to  remind  M.  de  Schonen  in  his  own 
speech;  he  claimed  that  the  circumstances  were  changed  and 
approved  without  reservation  the  opinion  expressed  previously 
by  another  officer  of  the  Cour  des  Comptes,  his  new  colleague, 
M.  Rihouet,  who  had  declared  that  publishing  the  report  to 
the  king  was  superfluous.    He  added : 

"You  may,  gentlemen,  order  publicity  by  printing  the 
report  to  the  king.  But  the  result  may  be  that  the  report 
will  resent  the  obligation  under  which  you  have  put  the 
Cour  des  Comptes;  and,  instead  of  containing  certain  in- 
teresting and  far-reaching  facts,  the  report  will  be  only 
a  pale  copy  of  what  it  would  have  been  without  this  pub- 
licity."    (Session  of  April  2,  1832.^) 


Annual 
Reports 
to  the 
Legislature 


Reports 

Are 

Exhaustive 


Article  15,  of  the  law  of  April  23,  1832,  was  nevertheless 
voted  in  the  following  terms:  "The  report — prepared  each 
year  by  the  Cour  des  Comptes,  by  virtue  of  Article  22  of  the 
law  of  September  16,  1807 — shall  be  printed  and  distributed 
to  the  chambers.**  Henceforth,  the  Cour  des  Comptes  was 
specifically  vested  with  the  power  to  print  and  consmunicate 
to  the  legislature  through  the  intermediary  of  the  Chief  Ex- 
ecutive its  observations  on  the  administration  of  the  ordonna- 
teurs.  It  thus  became  an  aid  to  the  legislative  authority  in 
two  ways :  One  of  them  through  the  Cour  des  Comptes'  gen- 
eral declarations  on  conformity,  and  the  other,  through  its 
annual  report.  In  an  indirect  form,  without  acquiring  a  judi- 
cial stature  and  without  positive  sanction,  its  annual  report  to 
the  Chief  Executive  gave  to  the  Cour  des  Comptes  precisely 
the  same  control  over  the  ordonnateurs  of  which  Article  18 
of  the  organic  law  of  1807  appeared  to  divest  them.  The 
report  discloses,  first,  the  opinions  on  reforms  and  improve- 
ments which  the  examination  of  the  various  accounts  have 

^  M.  de  Schonen  himself  said  as  follows  in  1829:  "Gentlemen,  I 
cannot  entertain  the  idea  that  the  report  of  the  Cour  des  Comptes, 
made  in  secret,  is  more  truthful  ^han  if  it  were  intended  for  pub- 
licity. No!  the  Magistrates  do  not  have  two  kinds  of  language,  they 
only  know  the  language  of  duty  and  the  language  of  truth!"  (Ses- 
sion of  May  20,  1829.)  It  is  hard  to  contradict  oneself  more  than 
that  within  three  years. 

"  578 


CONTROL  OVER  THE  ORDONNATEURS 


suggested;  then,  by  degrees  it  points  out  the  ascertained  in- 
fractions committed  by  the  ordonnateurs.  The  President  of 
the  RepubHc,  after  the  report  has  been  submitted  to  him,  re- 
quests each  minister  to  explain  the  irregularities  concerning 
his  department.  Each  minister  exculpates  himself,  or  denies 
or  admits,  promising  at  the  same  time  to  do  better  in  the  fu- 
ture, but  none  promises  not  to  relapse  into  his  errors  at  the 
first  opportunity.  The  total,  the  observations  made  by  the 
Cour  des  Comptes,  and  the  replies  of  the  interested  adminis- 
trations, constitutes  the  annual  volumes  printed  and  distrib- 
uted in  the  Chamber  of  Deputies  and  in  the  Senate,  prior  to 
November  i,  of  the  year  following  the  closing  of  the  expired 
fiscal  period.  (Laws  of  January  26,  1889  and  April  14,  1896.)^ 
Such  control  often  goes  very  far.  We  have  already  quoted 
a  number  of  examples  of  fictitious  pay-warrants,  of  irregular 
expenditures,  of  exceeding  of  appropriations,  etc.,^  discovered 

^  The  reason  why  these  laws  insist  so  much  upon  the  publicity  of 
the  report  is  that,  as  a  matter  of  fact,  publicity  alone  is  able  to  render 
effective  the  observations  of  the  Cour  des  Comptes.  The  example 
of  the  Referes  amply  substantiates  this  contention. 

The  Referes  are  "communications  containing  observations  ad- 
dressed to  the  ministers  by  the  Cour  des  Comptes  in  re  matters  con- 
cerning the  ordonnateurs."  The  various  administrations,  however, 
paid  so  little  attention  to  these  Referes,  which  were  simple  manu- 
script communications,  that  the  Minister  of  Finance  deemed  it  neces- 
sary finally  to  organize,  by  the  decrees  of  May  13  and  August  31, 
191 1,  a  permanent  commission,  the  duty  of  which  would  be  to  see 
that  the  criticisms  made  by  the  Cour  des  Comptes  should  not  become 
dead  letters.  Henceforth  the  interested  branches  of  the  service  will 
have  to  submit,  within  four  months,  a  precise  and  satisfactory  answer 
to  the  observations  made. 

2  Among  the  irregularities  pointed  out  by  the  Cour  des  Comptes, 
the  following  can  be  picked  out  as  examples:  Purchases  of  bonds 
at  the  Stock  Exchange  on  the  eve  of  the  elections  of  October,  1877, 
for  the  purpose  of  supporting  the  stock  market.  New  Year's  gifts 
to  various  agents  of  the  central  administration  charged  against  the 
appropriations  for  materials  for  large  public  works.  Allowances  to 
janitors,  gardeners,  watchmen,  etc.,  allotted  from  the  appropriations 
for  the  rebuilding  and  large  repair  work  on  government  buildings. 
Repair  work  on  the  scale-  platform  of  the  cartridge  factory  at  Vin- 
cennes  charged  against  the  appropriations  for  the  expedition  of 
Tonkin.  Clock  purchased  with  funds  allotted  to  the  chapter  of  food- 
stuffs. Provisions  of  bread,  meat  and  coffee  charged  against  the 
appropriations  for  forage.  Traveling  expenses  of  ministers  not 
sufficiently  justified.  Costs  of  representation  put  at  the  disposal  of 
mayors.  Costs  of  refreshments  for  the  Conseils  Generaux.  Illegal 
turning  over  of  pieces  of  ordnance  out  of  use  for  various  monuments 
and  statues,  elc.     Frequently  members  of  the  legislature,  solicitous 

579 


The 
Control 
Is  Far- 
Reaching 


THE  BUDGET 

through  this  control.  If  the  annual  reports  of  the  Cour  des 
Comptes  were  lacking,  the  majority  of  facts  of  this  nature 
would  remain  unknown  to  the  legislature  and  even  to  the  Gov- 
ernment. 

In  brief,  notwithstanding  the  unavoidable  red  tape  and  the 
opposition  of  interested  parties,  the  publication  of  the  annual 
report  of  the  Coiir  des  Comptes  yields  valuable  results,  which 
the  attorney  general  of  this  great  institution  enumerated  with 
just  pride,  in  his  speech  at  the  convening  session,  a  few  years 
ago. 


CouRs  DES  Comptes  or  Analogous  Institutions  in  Other 

Countries 

In  France,  the  Cour  des  Comptes  is  a  tribunal,  judging  ac- 
counts a  posteriori,  on  the  basis  of  documents.     In  certain 
other  countries,  on  the  other  hand,  the  control  of  accounts  does 
'  not  rest  with  a  tribunal,  but  with  a  branch  of  the  administra- 

tive service.  Elsewhere  the  control  of  accounts  exercised,  of 
course,  by  an  independent  tribunal  is  based  not  only  on  docu- 
ments, but  on  visits  and  inquiries  on  the  spot.  Elsewhere,  a 
modern  innovation  makes  the  control  by  the  Cour  des 
Comptes  a  preventive  one. 

First,  England  puts  the  control  over  all  the  accountable  oflfi- 
troner^°and'  ^^^^  ^^  ^^^  Kingdom  into  the  hands  of  one  officer,  the  comp- 
Auditor  trollcr  and  auditor  general,  of  whom  we  have  spoken ;  ^  he 

General  performs  the  functions  which  until  1866  were  exercised  by  a 
hoard,  the  Audit  Office.  He  is  appointed  by  the  sovereign 
and  paid  out  of  the  Consolidated  Fund  and  cannot  be  removed, 
except  by  the  two  chambers,  after  petitioning  the  Crown  to 
that  effect.  Strictly  speaking,  he  would  have  the  right  to 
present  his  accounts  directly  to  the  House  of  Commons,  in 
case  the  Treasury  should  exceed  the  legal  time  limit.  His  in- 
dependence is  thus  secured  to  a  large  degree.     However,  he 

of  public  welfare,  avail  themselves  of  the  reports  of  the  Cour  des 
Comptes  for  the  purpose  of  denouncing  abuses  which  the  govern- 
ment routine  continues  in  spite  of  all  injunctions.  See  particularly 
on  this  subject  the  speech  of  Deputy  Brousse,  Session  of  November 
II,  1911. 

^  Chapter  XXV,  relating  to  the  control  of  public  expenditures, 
furnishes  the  details  on  the  function  of  the  comptroller  and  auditor 
general. 

580  1 


CONTROL  OVER  THE  ORDONNATEURS 

still  remains  an  officer,  subordinated  to  the  Treasury.^  On  the 
other  hand,  he  is  the  sole  judge.  Supplied  in  case  of  necessity 
with  an  assistant,  he  himself  pronounces  the  decisions  in  his 
sphere  of  operations.-  The  law  intended  to  constitute  this 
unity  so  "that  the  responsibility  would  be  more  deeply  felt  by 
a  single  officer  than  could  possibly  be  the  case  with  five  or 
six."  In  order  to  release  the  accountable  officers,  England 
did  not  deem  it  necessary  to  organize  a  solemn  procedure  and 
to  render  opinions;  a  simple  administrative  decision,  emanat- 
ing from  a  source  rendered  as  independent  as  possible,  is 
deemed  sufficient.  The  advantage  of  this  system  lies  in  the 
promptness  of  the  administrative  verifications,  following  the 
facts  as  closely  as  possible — so  closely  that  twenty-eight 
months  after  the  first  shilling  is  expended,  said  a  French  offi- 
cial sent  on  a  mission  to  London,  the  definite  liquidation  of 
the  fiscal  period  is  complete.  Such  rapidity  should  fill  us  with 
envy.^ 

In  Russia,  where  the  control  is  also  in  the  hands  of  the  Russia  Has 
Administration,  a  special  ministry  of  control  directs  sixty  ^'co^Jroi 
chambers  of  control  in  the  provinces  placed  outside  of  the 
jurisdiction  of  the  local  governors.  These  chambers  of  con- 
trol revise  the  operations  of  the  accountable  officers,  receive 
the  accounting  records  as  they  are  prepared  and  themselves 
prepare  the  accounts  on  the  basis  of  these  documents.     The 

^  The  Treasury  appoints  directly  the  subordinate  officers  of  the 
comptroller  and  auditor  general.  The  Treasury  approves  its  instruc- 
tions to  the  accountable  officers  prior  to  sending  them  out.  The 
Treasury  also  reserves  for  itself  in  certain  cases  the  right  to  acquit 
the  accountable  officers  of  the  rejections  or  the  penalties  imposed 
upon  them  as  the  result  of  the  verification  of  their  accounts. 

2  Below  the  comptroller  and  auditor  general  there  are  only  agents, 
inspectors,  examiners  and  deputy  examiners  who  have  charge  of 
verifying  for  him  the  accounting  records  and  of  preparing  matters 
for  him. 

3  The  attorney  general  of  the  Cour  dcs  Coniptcs  has  thus  set  forth 
the  differences  of  political  and  social  organization  which  permits 
England  to  introduce  this  system  of  the  control  of  accounts:  "Why 
do  these  institutions,  where  the  administrative  functions  become 
mingled  with  judicial  functions,  continue  in  Great  Britain?  It  is 
because  these  ministers,  these  lords  of  the  treasury  are  the  chiefs 
of  a  powerful  and  respected  oligarchy  .  .  .  the  centuries  old  interests 
of  which  have  never  ceased  to  mingle  with  the  interests  of  the  State. 
The  confidence  which  they  inspire  even  to  their  political  adversaries 
is  justified  by  the  increasing  prosperity  and  the  profound  security 
which  England  enjoys  under  their  administration."  (Speech  at  the 
convening  session,  made  on  November  3,  1865,  by  M.  de  Casabianca.) 

S8r 


THE  BUDGET 


The 
Russian 
and  the 
French 
Systems 


The 

Superior 
Prussian 
Chamber  of 
Accounts 


The 

Cour  des 
Comptes 
in  Belgium 
and  Italy 


members  of  these  chambers  proceed  periodically  and  unex- 
pectedly to  inspect  the  bureaus  of  accountable  officers  and  to 
verify  the  contents  of  the  treasuries,  to  prosecute  local  in- 
quiries, etc. 

These  last  functions  of  the  Russian  system  of  control  lead 
us  to  the  consideration  of  the  second  point  of  dissimilarity 
from  the  French  system,  which  dissimilarity  has  been  pointed 
out.  This  lies  in  the  authority  given  to  the  agents  of  control 
to  travel  and  to  make  the  verifications  on  the  spot.  This  sys- 
tem is  found  not  only  in  Russia,  but  also  in  Prussia,  where 
it  is  even  more  striking,  because  the  superior  Prussian  cham- 
ber of  accounts  resembles,  in  all  else,  our  own  Cour  des 
Comptes.  Its  members  are  not  subordinate  to  any  other  min- 
ister; they  constitute  an  irremovable  official  body,  responsible 
directly  to  the  Emperor.  The  superior  chamber  renders  opin- 
ions on  the  reports  of  each  accountable  officer;  these  it  sub- 
sequently recapitulates  in  order  to  certify  by  general  declara- 
tions of  conformity  the  exactness  of  ministerial  accounts.  Fi- 
nally, the  superior  chamber  of  accounts  reports  in  a  special 
paper  to  the  Landtag  the  infractions  of  the  financial  legisla- 
tion which  have  been  committed  by  the  administrators.  Be- 
sides these  powers,  which  are  analogous  to  those  we  have  stud- 
ied in  France,  the  superior  Prussian  chamber  of  accounts  has 
the  right,  as  we  have  said,  to  complete  its  control  by  means 
of  actual  examinations  of  the  treasuries,  by  making  inven- 
tories of  storerooms,  by  proceeding  to  various  places,  by 
cross-inquiries,  etc.^  Do  such  supplementary  functions  appear 
to  be  wise  for  France?  In  the  first  place,  [the  French]  Cour 
des  Comptes  would  lose  its  character  of  tribunal,  passing  in  a 
solemn  way  on  accounts  submitted  to  it  for  examination.  Fur- 
thermore, the  councilors  of  the  Cour  des  Comptes  would, 
when  making  such  outside  tours,  run  the  risk  of  meeting  the 
members  of  the  general  inspection  of  finances,  to  whom  such 
missions  are  exclusively  reserved. 

The  control  of  the  Cour  des  Comptes  is  of  a  preventive 
nature  in  certain  countries.  The  preventive  control  of  the 
Cour  des  Comptes  in  Belgium  is  exercised  as  to  the  passing 
of  payment  vouchers  and  to  payments.  In  Italy,  this  preven- 
tive control  also  applies  to  the  actions  of  public  powers,  to 

^  M.  Marques  di  Braga  has  given,  in  the  Annuaire  de  la  legislation 
etrangere  of  1873,  the  translation  of  the  law  of  March  27,  1872, 
relating  to  the  organization  and  the  functions  of  the  Supreme  Court 
of  Accounts  in  Prussia. 

582 


CONTROL  OVER  THE  ORDONNATEURS 

decrees  and  ministerial  orders.  Under  this  new  form,  it  dis- 
covers the  irregularities  at  their  source  proper,  prevents  the 
ministers  from  incurring  expenditures  without  appropriations 
— expenditures  which  must  be  paid  subsequently  ^ — and  se- 
cures as  a  result  thereof,  and  as  efficaciously  as  possible,  the 
strict  execution  of  legislative  authorizations.  We  shall  not 
repeat,  in  this  connection,  the  details  given  on  this  subject  in 
Chapter  XXV. 

It  is  sufficient  to  state  in  addition,  that,  if  the  Italian  pre-   The  Italian 
ventive  system  had  been  working  in  France,  the  various  cases   ^^p^p^-^^i* 
of  exceeding  of  appropriations  mentioned  above,  could  not    in  France 
have  taken  place.     A  fact  particularly  suggestive  in  this  se- 
quence of  ideas  deserves  to  be  added  to  those  previously  cited. 
On  January  20,  1886,  the  Minister  of  the  Navy  decided  pro- 
pria niotu,  by  a  simple  order  that  the  age  limit  for  the  per- 
sonnel of  his  department  should  henceforth  be  decreased  by 
almost  three  years.     As  an  immediate  result,  sixty-two  assis- 
tants, almost  all  belonging  to  superior  grades,  were  prema- 
turely admitted  to  pensions,  the  amount  of  which  encumbered 
the  budget  by  sums  greatly  exceeding  the  legislative  appropria- 
tions.    Although  the  chamber,  from  the  end  of  1886,  con- 
demned the  measure  in  question,^  the  minister,  until  his  retire-   A  Recent 
ment  from  office  in  the  middle  of  July,  1887,  continued  to    Case  in 
insist  upon  the  execution  of  his  order  of  January  20,  1886. 
From  this  resulted  an  exceeding  of  the  appropriation  by  the 
sum  of  547,516  francs,  and  a  demand  for  a  supplementary 
appropriation  at  the  end  of  the  year  1888  intended  to  cover 
this  extra  expenditure.     The  chambers  then  hotly  blamed  the 
minister,^  declaring  that  his  personal  responsibility  was  in- 
volved.   But,  it  was  observed,  the  mistake  had  been  made  and 

*  M.  Cerboni,  Director  General  of  Accounting  in  Italy,  wrote  very 
justly  as  follows:  "You  know  very  well  that  as  soon  as  an  expendi- 
ture has  been  incurred,  it  has  to  be  paid  per  fas  et  nefas."  (June  9, 
1888.) 

2  The  Chamber  of  Deputies  in  its  session  of  November  25,  1886, 
not  only  disapproved  of  the  ministerial  order  of  the  preceding  Janu- 
ary 20,  but,  in  order  to  give  emphasis  to  this  blame,  it  reduced  by 
787,000  francs  the  figures  of  the  appropriation  for  the  pensions  of 
the  Navy,  the  amount  of  which  reached  the  figure  of  26,276,000 
francs. 

3  The  senator  reporting  on  the  subject  to  the  Senate  expressed 
himself  as  follows:  "The  actions  of  the  minister  have  been  the 
object  of  severe  censure.  .  .  .  There  is  no  doubt  as  to  the  fact  that 
his  responsibility  is  still  involved."     (November  29,  1888.) 

583 


^"^  THE  BUDGET 

a  new  minister  had  come  into  office — and  that  above  all,  the 
pensioners  were  waiting  for  the  liquidation  of  their  pensions — 
so  the  supplementary  appropriation  was  finally  voted.  If  a 
preventive  control  had  been  working,  the  unlawful  ministerial 
order  could  not  have  been  issued  and  still  less  could  it  have 
prolonged  its  existence  for  two  years.  Because  of  its  inher- 
ent irregularity,  the  vise  of  the  Cour  des  Coniptes  would  im- 
mediately have  been  refused  to  such  an  order. ^ 

To  the  three  characteristic  features  of  the  Cours  des  Comptes 
in  foreign  countries,  which  have  been  enumerated  above,  the 
Italian  Cour  des  Comptes  adds  a  fourth,  which  is  its  specialty. 
This  consists  of  a  verification  each  month,  in  the  course  of  the 
fiscal  period,  of  the  accounts  of  the  ministers.  For  this  pur- 
pose, the  Minister  of  the  Treasury  transmits  each  month  to 
the  Cour  des  Comptes,  as  the  operations  are  carried  out,  state- 
ments of  revenues  and  of  expenditures,  accompanied  as  far  as 
the  revenues  are  concerned  by  reports  from  the  diflFerent  in- 
spectors of  the  financial  administrations  and,  as  far  as  expendi- 
tures are  concerned,  by  vouchers  showing  receipted  disburse- 
ments. The  Cour  des  Comptes  immediately  verifies  these 
statements  without  prejudicing  the  judicial  control  of  the  ac- 
counts of  accountable  officers,  which  takes  place  after  the 
execution  of  the  budget.^  Thus,  the  Cour  des  Comptes  finds 
itself  in  a  position  to  ascertain  at  the  expiration  of  the  twelfth 
month  the  exactness  of  the  totals  of  ministerial  accounts.  Un- 
doubtedly these  results  are  based  on  temporary  elements  only, 
the  figures  of  which  are  likely  to  be  corrected  when  the  opin- 
ions relating  to  the  individual  reports  of  the  accountable  offi- 
cers shall  be  recapitulated;  then,  the  Cour  des  Comptes  will 
be  able  to  show  exact  totals  almost  to  a  cent.  In  the  mean- 
time, when,  in  France,  in  the  majority  of  cases,  the  accounts 
of  the  accountable  officers  are  about  to  be  submitted,  the  Ital- 
ian accounting  has  already  been  audited  with  approximate 
correctness. 

^  So  much  more,  because  the  previous  vise  of  the  orders  relating 
to  the  granting  of  pensions  is  specified  in  a  particular  manner  in  the 
Italian  accounting  law. 

2  The  ordinary  forms  of  passing  on  the  accounts  of  the  accountable 
officers  in  Italy  are  the  same  that  we  have  seen  put  in  practice  in 
France.  A  third  section  of  the  Italian  Cour  des  Comptes  has  special 
charge  of  this  judicial  control  a  posteriori.  The  first  section  has 
among  its  functions  the  preventive  control;  the  second  section  has 
among  its  functions  the  examining  of  decrees  or  orders  relating  to 
pensioning,  removal,  etc.j  and  to  the  liquidation  of  pensions; 

584 


CONTROL  OVER  THE  ORDONNATEURS 


In  brief,  the  French  Coiir  des  Comptes — compared  with  the 
Cours  dcs  Comptes  or  analogous  institutions  of  foreign  coun- 
tries— ^shows  the  following  characteristic  features :  It  does 
not  constitute  a  branch  of  the  Administration,  but  an  inde- 
pendent judicial  body;  it  does  not  travel,  but  passes  its  opin- 
ions wholly  on  the  basis  of  documents;  it  does  not  exercise 
any  preventive  control  in  the  course  of  the  execution  of  the 
budget,  as  it  works  only  a  posteriori  with  regard  to  closed  fis- 
cal periods ;  finally,  it  does  not  affirm  the  exactness  of  minis- 
terial accounts,  until  after  having  verified  all  the  individual 
reports  of  the  accountable  officers  without  preceding  this  defi- 
nite control  by  a  temporary  and  more  rapid  control. 

Nobody  should  wonder,  therefore,  that  the  French  Cour  des 
Comptes — founded  in  so  sound  a  way  in  1807,  and  so  justly 
proud  of  its  long  and  honorable  traditions — should  hesitate  to 
accept  a  new  function.  It  would  be  a  degradation  to  the 
French  Cour  des  Comptes  to  descend  from  its  judicial  seat,  to 
renounce  the  certainty  of  its  verifications  of  closed  fiscal  pe- 
riods, or  to  abandon  the  rigorous  precision  of  its  declarations 
a  posteriori.  This  sacrifice,  however,  is  not  demanded  of  it. 
There  is  in  contemplation  merely,  the  adding  of  subsidiary 
functions  to  its  present  functions  which  would  remain  intact. 
The  establishment  of  a  parliamentary  regime  brought  with  it 
new  needs  for  control.  There  is  a  growing  mass  of  operations 
having  to  do  with  revenues  and  expenditures,  hence — because 
of  frequent  changes  in  the  personnel  of  the  ministerial  depart- 
ments, and  because  of  the  constant  interference  of  the  deputies 
in  public  affairs — the  auditors  need  to  penetrate  in  a  more 
immediate  way  into  contemporaneous  facts.  They  must  bring 
the  machinery  for  preventive  control  as  close  as  possible  to 
the  work  of  the  ordonnateurs ;  they  must  keep  the  chambers 
posted  from  day  to  day,  and  above  everything  else,  they  must 
struggle  hard  to  curb  the  tendency  to  exceed  appropriations, 
which  upsets  the  original  estimates  and  destroys  the  budgetary 
equilibrium.  No  other  authority  save  the  Cour  des  Comptes 
could  perform  this  indispensable  service  in  France.  We  need 
not  hesitate  to  repeat  in  this  connection  the  conclusions  for- 
mulated in  Chapter  XXV. 


Character- 
istics of 
the  French 
Cour  des 
Comptes 


Proposed 

New 

Functions 


58s 


CHAPTER  XXX 

REGULATION  OF  THE  BUDGET 
I  • 

The  Definite  Regulation  of  the  Budget:  Arguments  Against  the  Law 
on  Regulation;  The  Ends  Served  by  the  Law  on  Accounts;  Docu- 
ments Assembled  in  the  Law  on  Accounts;  The  Ministerial  Ac- 
counts. 

Parliamentary  Procedure:  Too  Long  Delays;  Little  or  No  Debate; 
Carelessness  of  the  Chambers;  Moral  Culpability  of  the  Chambers; 
Chambers  Punctual  Under  the  Restoration;  Table  of  Approved 
Dates;  Famous  Debates  on  the  Regulatory  Law;  Important  Sub- 
jects Discussed;  Budget  Plans  Debated. 

Regulation  of  Accounts  in  England:  No  Law  of  Regulation;  Official 
Statements;  What  Is  an  Appropriation?  Committee  on  Public 
Accounts;  The  Comments  of  the  Commissioners;  Excellence  of 
the  English  System. 

The  voting  on  the  law  for  the  definite  regulation  of  the 
budget  or  the  law  on  accounts  ^  ends  the  machinery  for  budg- 
etary control.  Until  1818,  the  Administration  published  more 
•  or  less  completely  the  condition  of  the  expired  fiscal  periods 
in  tables  annexed  to  the  fiscal  law.  No  legislative  acts,  how- 
ever, intervened  to  close  the  figures  finally.^  The  law  of  May 
15,  18 18,  contained  the  following  provisions:  "Article  102. 
The  definite  regulation  of  previous  budgets  shall,  in  the  future, 
form  the  subject  of  a  special  law,  which  shall  be  suggested  to 
the  chambers  before  submitting  the  annual  fiscal  law."  Since 
18 19,  this  rule  has  been  applied.  The  deputy  reporting  on  this 
first  bill  of  regulation — ^relating  to  the  fiscal  periods  181 5, 
1816  and  1817 — declared: 

"The  preceding  fiscal  law  intended  that  the  definite 
regulation  of  previous  budgets  should  be  in  the  future 
the  subject  of  a  special  law,  the  submitting  of  which 

^  The  real  title  reads  as  follows :  "Law  regulating  definitely  the 
budget  of  the  fiscal  period  .  .  ." 

2  Thus,  the  fiscal  periods,  1814  and  1815,  were  successively  regu- 
lated with  new  figures  by  the  three  laws  on  budgets  of  1816,  1817 
and  1818. 

586 


REGULATION  OF  THE  BUDGET 

should  be  accompanied  by  accounts  required  by  the  law 
of  March  25,  181 7.  This  is  the  first  time  that  this  legisla- 
tive provision  has  been  put  into  execution.  Time  will 
make  its  importance  appreciated/'  (Report  of  Deputy 
Roy,  April,  1819.) 

At  the  beginning  of  the  Restoration,  however,  several  mem-  Arguments 
bers  of  the  extreme  parties  contested  the  necessity  of  the  law   ^f^L^aw  on 
on  accounts,  even  pretending  to  discover  in  this  law  an  en-   Regulation 
croachment  upon  the  prerogatives  of  the  Crown.    The  regula- 
tion of  accounts,  they  said,  rests  with  the  executive  authority. 
The  legislature  is  supposed  only  to  make  the  laws,  to  express 
wishes  and  to  issue  commands.     An  account,  on  the  other 
hand,  is  but  a  statement  of  facts,  and  facts  are  not  ascertained 
by  law.    These  reactionary  theories — analogous  to  the  theories 
set  forth  in  Chapter  II,  with  regard  to  the  vote  on  budgetary 
expenditures — acquired    enough    consistency   to   warrant  the 
necessity  of  lengthy  refutations.     The  speech  of  Count  Daru 
in  the  Chamhre  des  Pairs  on  June  22,  18 19,  devotes  fifteen  or 
twenty  pages  to  show  that : 

"To  demand  accounts  does  not  mean  any  intention  on 
the  part  of  the  chambers  to  encroach  upon  the  Royal  au- 
thority, .  .  .  that  the  right  of  examining  and  controlling 
the  expenditures  of  the  State  necessarily  coincides  with 
the  right  of  voting  the  funds  intended  for  meeting  these  • 
expenditures,  and  that  it  is  impossible  to  vote  new  taxes 
without  knowing  to  what  use  the  preceding  taxes  were 
put.  .  .  ." 


The  law  of  accounts,  in  fine,  gives  a  necessary  finality  to  the   The  Ends 
law  of  the  budget.    The  one  anticipates  and  authorizes  the  pub-   Served  by 
lie  revenues  and  expenditures,  the  other  proves  their  fulfil-   AccounTs°' 
ment.       The  one  outlines  the  way  of  the  execution  of  the 
budget ;  the  other  ascertains  whether  this  road  has  been  strictly 
followed.     "At  this  second    examination,    which    the    same 
budget  must  undergo  before  your  eyes,"  Mollien  used  to  say, 
"the  actual  facts  are  confronted  with  the  promises.    The  facts 
stand  in  judgment  on  the  estimates."     (Report  on  the  plan  of 
the  regulation  of  the  fiscal  period  1828.     Chamhre  des  Pairs, 
December  27,  1830.)     The  law  on  accounts,  by  bringing  the 
budget  before  the  legislature  after  its  execution,  restores  the 
machinery  to  equilibrium;  the  preparation  and  the  execution 

587 


THE  BUDGET 


of  the  budget  rest  in  the  hands  of  the  executive  power,  while 
the  control  as  well  as  the  vote  on  the  budget  remains  a  pre- 
rogative of  the  chambers. 

If  we  shall  pass  lightly  over  the  law  on  accounts,  in  spite 
of  its  importance,  it  is  because  its  study  is  fairly  completed 
by  enumerating  the  documents  used  in  its  preparation.  Let  us 
recall  the  list :  ( i )  Accounts  of  the  disbursing  ministers,  defi- 
nite account  of  revenues  and  general  statement  of  finances 
(Chapter  XXIX),  prepared  by  virtue  of  the  law  of  March  25, 
181 7,  and  of  the  ordinance  of  December  20,  1823 ;  (2)  reports 
and  minutes  of  the  commission  for  the  verification  of  the  min- 
isterial accounts,  which  was  organized  by  the  ordinance  of 
December  20,  1823;  (3)  general  declarations  of  conformity 
rendered  by  the  Cour  des  Comptes  by  virtue  of  the  ordinance 
of  September  14,  1822,  which  was  completed  by  the  ordinance 
of  July  9,  1826;  (4)  annual  report  of  the  Cour  des  Comptes 
to  the  Chief  Executive  published  and  distributed  to  the  cham- 
bers in  conformity  with  the  provisions  of  the  law  of  April  21, 
1832;  (5)  finally,  the  statement  of  supporting  arguments  and 
the  government  bill  with  regard  to  the  regulation  itself. 

The  material  exactness  of  ministerial  accounts  is  first  certi- 
fied to  by  the  extra-parliamentary  commission  on  verification 
and  by  the  recapitulating  work  of  the  Cour  des  Comptes.  It- 
is  quite  an  achievement  to  be  able  to  operate,  keeping  accurate 
figures.  The  statements  of  the  Cour  des  Comptes  point  out  in 
a  special  table  "the  irregularities  and  the  infractions  of  the 
laws  and  regulations  of  public  accounting" ;  the  annual  report 
to  the  President  of  the  Republic  appraises  the  financial  man- 
agement of  the  accountable  officers  and  the  ordommteurs ;  this 
appraisal,  when  checked  against  the  explanations  furnished 
by  the  various  administrations,  enables  one  to  judge  of  the 
merits  of  the  criticism.  Equipped  with  this  important  mass  of 
information,  the  legislature,  fully  familiar  with  the  problem, 
condemns  or  approves,  establishes  new  rules  on  the  basis  of 
past  experience,  determines  the  responsibilities,  and  amends 
instructions  and  decisions  involved  by  the  operations  per- 
formed by  the  Government  during  the  course  of  the  expired 
fiscal  period.  "The  National  Assembly  shall  pass  on  and  defi- 
nitely audit  the  accounts  of  the  Nation,"  reads  the  law  of  Sep- 
tember 17,  1 79 1.  This  formula,  proclaimed  by  the  Constitu- 
tional Convention,  which  did  not  succeed  in  putting  it  into 
practice,  has  thus  become  a  verity.  The  legislature  passes  on 
and  audits  the  accounts  of  the  Nation. 

588 


REGULATION  OF  THE  BUDGET 


Parliamentary  Procedure 


The  parliamentary  procedure  with  regard  to  the  vote  on  the 
law  of  accounts  is  the  very  same  as  that  on  the  vote  on  the 
budget,  the  mechanism  of  which  has  already  been  described. 
The  Minister  of  Finance  submits  the  bill,  preceded  by  his  state- 
ment of  supporting  arguments,  to  the  Chamber  of  Deputies, 
which  turns  it  over  for  purposes  of  study  to  a  commission, 
which  then  drafts  a  report  and  submits  to  the  Assembly  the 
text  of  the  bill.  The  general  discussion  and  the  discussion  by 
article  ^  are  followed  by  partial  votes,  which  are  completed  by 
a  ballot  on  the  whole.  The  same  formalities  take  place  in  the 
Senate.  Then  follows  the  publication  of  the  law,  which  is 
final. 

The  questions  of  procedure  have,  in  this  connection,  a  sec- 
ondary importance  only.  Let  us,  therefore,  devote  our  atten- 
tion, trying  to  follow  the  chambers  of  our  times  in  the  per- 
formance of  their  functions  of  control.  In  the  first  place,  the 
delays  in  the  examination  of  the  law  on  accounts  by  the  legis- 
lature make  a  painful  impression.  In  this  connection,  the 
dates  speak  for  themselves.  The  budgets  for  the  fiscal  periods 
1871,  1872,  1873  and  1874  were  finally  approved  by  the  laws 
of  July  23,  of  August  I,  II  and  14,  1885,  that  is,  ten,  eleven, 
twelve  and  thirteen  years  after  the  closing  of  the  budgets. 
These  four  dates,  July  23,  August  i,  11  and  14,  1885,  after 
all,  are  delusive ;  ^  in  reality  a  single  session  was  sufficient  to 
approve  the  four  belated  budgets:  a  single  session  with  no 
discussion.  In  the  Chamber  of  Deputies,  the  four  plans — 
submitted  for  the  sake  of  formality  to  a  discussion,  in  which 
no  speaker  took  part — were  immediately  voted,  one  after  the 
other.  (Session  of  October  23,  1884.)  In  the  Senate,  there 
occurred  an  uninterrupted  reading  of  the  articles  which  were 
adopted  successively  by  rising  vote ;  a  ballot  was  taken  on  the 
total,  all  in  one  session  (July  9,  1885).  The  approval  of  the 
budget  for  1875,  carried  out  by  the  law  of  July  22,  1887,  took 


Too  Long 
Delays 


Little   or 
No  Debate 


1  The  voting  of  the  expenditures  which  are  inserted  in  the  annexed 
tables  does  not  take  place  by  ministerial  chapter,  as  far  as  the  Jaw 
of  regulation  is  concerned;  every  article  of  the  law  in  this  connection 
is  voted  on  successively. 

2  The  Government  spreads  apart  the  decree  of  the  publication  of 
these  laws;  first,  in  order  to  save  the  space  of  their  insertion  in  the 
official  papers,  then  in  order  to  give  to  every  one  of  them  a  distinct 
date. 


589 


THE  BUDGET 

place  ten  years  after  the  closing  of  the  fiscal  period.^  The 
laws  of  regulation  for  the  budgets  of  1876,  1877,  1878  and 
1879 — voted  by  the  Chamber  of  Deputies  eight,  nine,  ten  and 
eleven  years  after  their  closing  (March  24,  1889) — occupied 
but  a  single  session.  With  regard  to  the  fiscal  period  1876 — 
after  the  discussion,  both  general  and  by  article — an  additional 
provision,  relating  to  the  responsibility  of  a  former  minister, 
involved  in  connection  with  the  affair  of  a  special  train  for 
Don  Carlos,  of  which  we  have  spoken,  brought  on  a  debate 
embittered  by  political  strife.^  While  the  articles  of  the  budget 
for  1877  were  read,  the  assembly  was  silent,  or  engaged  in 
conversations,  and  voted  approval  without  discussion.  The 
budgets  for  1878,  1879  and  1880  evoked  discussions  over  the 
sinking  fund  bonds,  the  accounts  of  the  exposition  of  1878, 
the  system  of  distribution  of  relief  funds  allotted  the  victims 
of  disasters,  etc.  The  indifference,  however,  to  such  retro- 
spective control,  is  evidenced  by  the  vote,  which  was  given  in 
two  half -sessions.  On  the  evening  of  the  same  day,  a  news- 
paper made  light  of  this  assembly  of  archeologists,  engaged  in 
excavations  on  ancient  and  venerable  soil.  **A  definite  ap- 
proval of  the  budget,  ten  or  twelve  years  after  its  revenues 
and  its  expenditures  have  been  registered,  is  but  an  inoffensive 
pastime.  Scientists  may  derive  some  pleasure  from  that ;  but 
it  means  as  much  as  to  be  interested  in  some  megalithic 
tomb."  3 

The  budgets  for  1881  and  1882,  under  similar  conditions 
were  approved  at  a  single  session  by  the  Chamber  of  Deputies, 
Careless-  eight  or  nine  years  respectively  after  their  execution.  (Session 
ness  of  the  of  July  1 7,  1890.  Laws  of  June  7  and  14,  1891.)  Further- 
more, the  Senate  at  the  beginning  of  the  session  of  May  25, 
iSgi,  voted  hastily,  as  if  plans  of  local  interest  might  have 
been  involved,  the  successive  approval  of  the  budgets  for  1881, 

^  Several  legislatures  often  succeed  each  other  without  being  able 
to  attend  to  the  vote  on  the  bill  of  regulation  submitted  by  the  Gov- 
ernment. The  latter  reedits  its  statements  of  supporting  arguments. 
Thus,  with  regard  to  the  regulation  of  the  fiscal  period  1875,  after 
the  first  plan  had  been  submitted  on  March  22,  1879,  and  the  legisla- 
ture's term  had  expired  without  action,  a  second  plan  was  submitted 
on  November  11,  1881.  As  the  discussion  on  this  second  plan  had 
not  been  started  in  the  four  years  of  the  new  legislature,  the  law  of 
July  22,  1887,  finally  succeeded,  after  a  third  plan  had  been  submitted 
on  December  5,  1885,  to  regulate  the  fiscal  period  1875. 

2  See  the  statement  of  this  incident  in  Chapter  XIII. 

^Le  Temps  of  March  27,  1889. 

590 


Chambers 


REGULATION  OF  THE  BUDGET 

1882  and  1883.  A  single  speaker  arose  to  point  out  the  im- 
portance of  these  laws,  "which  we  are  voting,  so  to  speak,  by 
standing  up."  On  June  29,  1899,  two  plans  relating  to  the 
fiscal  periods  of  1889  and  1890,  and  on  June  21  and  June  23, 
1900,  three  plans  relating  to  the  fiscal  periods  1891,  1893  and 
1895,  were  passed  by  the  Chamber,  article  by  article,  without 
a  remark  to  interrupt  the  monotonous  reading  of  the  president. 
In  1902,  or  more  than  eleven  years  after  the  closing  of  the 
fiscal  period,  the  approval  of  the  budget  for  1889  was  voted,  as 
well  as  seven  other  laws  of  approval,  in  order  to  clear  their 
calendars.  The  reading  took  place  before  thinly  scattered, 
indifferent  auditors,  and  no  remark  was  passed,  save  by  a 
member  to  the  effect  that  no  quorum  was  in  the  Chamber. 

The  eight  laws  of  regulation,  passed  one  after  the  other  in 
1902,  filled  a  gap  of  six  years,  during  which  the  legislative 
body  forgot  about  this  part  of  its  task.  Since  then,  laws  have 
succeeded  each  other  from  year  to  year,  at  more  or  less  regu- 
lar intervals,  but  always  under  the  same  conditions  of  hasty 
examination,  of  delays  and  of  indifference.^ 

And  yet,  how  many  infractions  might  have  been  denounced, 
repressed  or  prevented,  if  the  chambers  had  been  willing  to  in- 
terest themselves  in  due  time  in  the  laws  of  regulation !  How 
many  facts  had  been  pointed  out  by  the  Cour  des  Comptes 
which  might  have  raised  wholesome  discussions!  How  many 
suggestions  might  have  been  made !  How  many  moral  teach- 
ings might  have  been  adduced !  The  deputies  and  senators  re- 
porting in  the  name  of  the  commissions  on  budget  are  well 
aware  of  conditions.  In  spite  of  this  unconcern,  the  com- 
missions on  budget  continue  meritoriously  to  perform  their 
duty.  Without  them,  parliamentary  control  would  remain  a 
dead  letter.^ 

*Tn  proportion,"  the  commissioners  wrote,  "as  one  is 
removed  from  the  facts,  the  responsibilities  disappear  or 

^  Read  the  account  of  the  session  of  the  Chamber  of  Deputies  of 
November  11,  1910. 

2  The  reports  of  the  commissions  of  the  legislature  are  almost 
always  prepared  in  normal  periods  of  time.  It  is  the  Chamber  which 
delays  the  putting  of  these  reports  on  its  order  of  the  day.  For  the 
fiscal  period  1889  the  commission  has  even  inaugurated  the  prepar- 
ing of  a  special  report  on  the  ministry  of  war,  the  irregularities  of 
which  the  commission  deemed  to  be  sufficiently  numerous  to  fill  a 
separate  volume.  (Report  of  December  9,  1894.)  See  the  same  way 
in  1912,  M.  Louis  Marin,  deputy  for  Nancy,  devoted  a  very  important 
report  to  the  ministry  of  foreign  affairs. 


THE  BUDGET 


Moral 
Culpability 
of  the 
Chambers 


diminish  and  the  sanctions  disappear  too.  One  leaves  the 
actual  in  order  to  enter  the  domain  of  history,  and  the 
resolutions  of  the  public  authorities  seem  rather  to  be 
doctrinaire  decisions  than  acts  of  authority."  (Report  of 
Senator  Clamageran  on  the  regulation  of  the  fiscal  period 
1871,  June  25,  1885.) 

"A  period  of  nine  years  has  elapsed  since  the  closing  of 
the  fiscal  period,  the  approval  of  which  is  now  demanded. 
During  this  interval,  ministers  have  succeeded  each  other, 
the  chambers  have  been  partly  renewed,  the  memory  of 
previous  financial  events  has  disappeared  to  a  certain  ex- 
tent and  the  legislative  control  over  an  administrative 
period,  lying  so  far  back,  resembles  a  scientific  research 
as  much  as  an  actual  supervision  over  the  use  of  appro- 
priations made  by  the  legislature."  (Report  of  Senator 
Marquis  on  the  regulation  of  the  fiscal  period  1875,  June 
14,  1887.) 

'*You  approve,  as  you  have  just  seen,  within  a  few 
minutes — ^without  having  heard  anything  and  without  dis-- 
cussion — a  budget  which  was  executed  ten  years  ago." 
It  follows  that :  "One  can  scarcely  be  amazed  to  find  the 
same  abuses  persisting,  the  same  infractions  of  our  laws 
and  our  financial  regulations  which  are  constantly  dis- 
closed in  the  reports  of  the  Cour  des  Comptes."  (Speech 
of  Deputy  Fernand  Faure,  reporting  in  the  name  of  the 
commission  on  budget,  March  25,  1889.) 


Chambers 
Punctual 
Under  the 
Restoration 


.  "N6  one  knows  any  longer,  how  and  from  whom  to  demand 
an  account."  (Speech  of  Senator  Boulanger,  reporting  in  the 
name  of  the  commission  on  finances,  March  25,  1895.)  "It 
is  really  lamentable  to  see  with  what  carelessness  the  legisla- 
ture regulates  at  times,  at  a  single  session,  without  comment 
and  before  vacant  seats,  10,000,000,000  to  12,000,000,000  of 
expenditures."     (Deputy  Bozerian,  May  14,  1895.) 

Thus,  at  the  very  moment  when  the  legislative  control  might 
assert  itself  efficaciously,  the  actual  parliamentary  practices  are 
futile,  rendering  all  the  heavy  preparatory  work  of  the  com- 
missions on  accounts  valueless.  These  commissions,  however, 
continue  to  perform  their  mission  without  becoming  discour- 
aged and  in  the  vain  hope  of  a  better  destiny. 

The  chambers  under  the  Restoration  had  entirely  diflFerent 
views  as  to  what  was  incumbent  upon  them.  In  the  first  place, 
as  far  as  dates  are  concerned,  the  regulating  laws  of  the  Resto- 

592 


REGULATION  OF  THE  BUDGET 

ration  were  discussed  and  passed  with  a  remarkable  degree  of 
punctuality.  Each  year,  without  exception,  about  the  middle 
of  the  third  year  of  the  fiscal  period,  the  law  of  approval  was 
enacted  before  that  approving  the  future  budget.  At  that  time 
the  fiscal  period  closed  on  December  31,  of  the  second  year; 
hence  the  chambers  finished  their  task  by  voting  the  law  of 
approval  only  six  months  after  its  closing.  This  may  be  seen 
from  the  following  table :  ^ 

Besides,  in  conformity  with  the  text  of  the  law  of  May  15, 
1 8 18,  the  laws  of  approval  under  the  Restoration  always  pre- 
ceded or  accompanied  the  submitting  of  the  future  budget; 
thus,  the  chambers  were  in  a  position  to  control  the  past  before 


^  In  connection  with  the  dates  of  the  laws  of  regulation  passed 
under  the  Restoration,  let  us  note  those  relating  to  fiscal  periods  after 
1870: 


Fiscal  period  1870 

Fiscal  periods  1871, 

Fiscal  period  1875 

Fiscal  periods  1876, 

Fiscal  period  1880 

Fiscal  periods  1881, 

Fiscal  periods  1884, 


1872,  1873,  1874 


1877,  1878,  1879 


1882,  1883 
1885,  1886 


Fiscal  periods  1887,  1888 

Fiscal  periods  1889  to  1896 

Fiscal  period  1897 

Fiscal  period  1898 

Fiscal  period  1902 

Fiscal  period  1903 


Law  of  August  5,  1882 
Laws  of  July  23,  August  i, 

II,  14,  1885 
Law  of  July  22,  1887 
Laws  of  March  6,  13,  20,  27, 

1890 
Law  of  June  27,  1890 
Laws  of  June  7,  14,  21,  1891 
Laws  of  March  23,  April  21, 

July  20,  1895 
Laws  of  April   16  and  May 

18,  1896 
Eight  successive  laws  in  1902 
Law  of  May  4,  1903 
Law  of  November   30,    1904 
Law  of  December  2,  191 1 
Law  of  December  11,  1911 


Thus,  while  under  the  Restoration  the  laws  of  regulation  followed 
each  other,  from  year  to  year,  they  are  now  separated  in  series  by 
ten,  twelve  or  thirteen  years  from  the  fiscal  periods  to  which  they 
refer. 

Approval  offiscal  periods,  1815,1816  and  1817    Law  of  June  27,  1819    Table  of 


1818 
1819 
1820 
1821 
1822 
1823 
1824 
1825 
1826 
1827 


May   28,  1820    Approval 

Apr.   23,  182 1    ^^ates 

Mar.  31,  1822 

Apr.     8,  1823 

July    13,  1824 

May  21,  1825 

June  21,  1826 

June    6,  1827 

Aug.    6,  1828 

July   i6,  1829 


593 


THE  BUDGET 


Famous 
Debates 
on  the 
Regulatory 
Law 


Important 

Subjects 

Discussed 


making  future  budgetary  appropriations.  Some  profit  was 
thus  gained  from  experience.  'The  past  throws  its  light  on 
the  future."  (Report  of  Augustin  Perier  on  the  regulation 
of  the  budget  for  1826,  May  28,  1828.)  'The  examination  of 
the  accounts  of  1825  must  be  attached  to  the  bill  oh  finances 
for  1828,  which  shall  occupy  us  constantly.'*  (Report  of 
Barbe-Marbois  on  the  regulation  of  the  budget  for  1825,  May 
21,  1827.)  Thus,  on  April  5,  1824,  the  bill  for  the  approval 
of  the  fiscal  period  1822,  was  submitted  jointly  with  the  budget 
bill  for  1825.  The  plan  for  the  approval  of  the  fiscal  period 
1827  was  presented  jointly  with  the  budget  plan  for  1830,  on 
March  11,  1829.  In  1833,  an  authorization  was  given  to  put 
off  for  two  months,  in  certain  special  cases,  the  submitting  of 
the  laws  on  accounts.  (Article  14  of  the  law  of  June  28, 
1833.)  On  this  score,  the  Minister  of  Finance,  Humann,  on 
March  10,  1834,  excused  himself  at  the  time  of  submitting  the 
accounts  for  1832,  for  being  the  first  to  avail  himself  of  this 
new  legal  power.  Many  scruples  of  this  kind  appear  to  be  out 
of  date  at  present. 

The  laws  of  regulation  under  the  Restoration  called  forth 
solemn  discussions  of  which  the  parliamentary  archives  of  the 
period  preserve  eloquent  evidence.  All  the  great  financial 
events  are  there  recorded  in  the  addresses  of  the  celebrated 
speakers  of  the  period.  The  moment  for  delivering  them  ap- 
peared particularly  well  chosen — close  enough  to  the  event  to 
be  sure  that  they  would  be  remembered,  but  far  enough  from 
the  passions  of  the  day  to  permit  one  to  free  himself  of  them. 
Thus,  very  interesting  questions  bearing  on  these  laws  were 
debated  by  eminent  men;  discussions  on  the  form  of  loans  con- 
tracted for  the  purpose  of  liberating  the  country;*  discus- 
sions on  the  intervention  of  the  minister  at  the  stock  exchange; 
discussions  on  carrying  forward  the  available  funds  of  the 
Treasury;  on  the  causes  of  the  Matheo  deficit;  discussions  on 
the  responsibility  incurred  as  the  result  of  the  Ouvrard  con- 

^  Criticism  formulated  at  that  time  against  the  operations  of  Cor- 
vetto  reaches  beyond  the  personality  of  the  minister  in  question;  at 
that  time  the  problem  of  establishing  modern  principles  of  public 
credit  was  involved.  Thus,  when  in  1821  and  1823  it  was  necessary 
to  contract  new  loans  in  order  to  balance  the  postponed  portion  of 
the  liquidation,  these  principles  happened  to  be  so  well  illustrated 
and  so  firmly  established  owing  to  the  preparatory  discussions  on  the 
laws  of  regulation,  that  the  sale  of  25,500,000  of  bonds  offered  for 
subscription  took  place  under  conditions  which  were  most  favorable, 
both  to  our  interest  and  to  our  prestige. 

594 


REGULATION  OF  THE  BUDGET 

tracts;  on  the  liquidation  of  the  accounts  of  the  Spanish  War; 
discussions  on  the  results  of  canal  franchises;  discussions  on 
the  exceeding  of  ministerial  appropriations  and  the  method  of 
proceeding  against  those  responsible  therefor;  discussions  on 
the  financial  prerogatives  of  the  chambers,  etc.  In  these  dis- 
cussions, such  men  participated  as  Baron  Louis,  De  Villele, 
Roy,  Royer-Collard,  Benjamin  Constant,  MoUien,  Daru, 
Barbe-Marbois,  Casimir  Perier,  etc. 

Not  only  did  each  discussion  terminate  in  a  proper  resolu- 
tion, but  the  general  rules  resulting  from  it  brought  our  sys- 
tem of  budgetary  accounting  to  a  high  degree  of  perfection  in 
a  short  time.  In  fact,  the  main  regulations  of  accounting 
originated  in  the  course  of  preparing  the  laws  on  accounts, 
either  directly  by  provisions  included  in  the  text  of  these  very 
laws,^  or,  indirectly,  by  measures  adopted  as  the  result  of  vot- 
ing on  them.  Thus,  the  famous  ordinances  elaborated  by 
De  Villele  in  1822,  1826  and  1827,  sum  up  the  principles  de- 
veloped in  the  discussions  on  the  laws  of  regulation.^ 

These  discussions,  however,  did  not  supplant  those  on  the  Budget 
future  budget — quite  the  contrary.        When  discussing  the  ^^^"^ 
budget,  the  chambers  contemplated  the   future  equilibrium, 
explored  the  financial  horizon,  and  endeavored  to  discover  the 
best  way  to  care  for  public  works.     When  they  prepared  a 

1  The  law  of  regulation  of  the  fiscal  periods  1815,  1816  and  1817 
provides  for  the  annual  publication  of  the  work  done  by  the  Cour 
des  Comptes.  (Article  20.)  The  same  law  provides  for  changing 
into  bills,  at  the  very  next  session  of  the  Chamber,  the  ordinances 
relating  to  extraordinary  and  urgent  expenditures.  (Article  21,  Law 
of  June  27,  1819.)  The  law  of  regulation  for  1820  provided  for  a 
general  statement  of  capital  deposited  as  bonds.  (Article  8,  Law 
of  March  31,  1822.)  The  law  of  regulation  of  the  fiscal  period  1825 
provided  for  the  carrying  forward  from  one  fiscal  period  to  the  other 
of  the  funds  not  used  and  resulting  from  the  proceeds  of  the  centimes 
paid  as  subsidies  in  case  of  damages  from  hailstorms,  conflagrations, 
etc.  (Article  8,  Law  of  June  21,  1826.)  The  law  of  regulation  of 
the  fiscal  period  1827  inaugurated  the  establishment  of  annual  inven- 
tories which  ascertain  the  situation  of  the  furniture  supplied  by  the 
State  to  the  departments  and  the  various  public  officers.  (Article  8, 
Law  of  July  29,  1829.) 

2  In  the  same  way  the  ordinance  of  1832  and  the  law  of  1833, 
relating  to  the  control  over  the  receipts  of  the  Treasury,  owe  their 
origin  to  a  statement  of  incidents,  with  regard  to  the  Kessner  deficit, 
which  statement  was  included  in  the  report  of  the  Cour  des  Comptes 
on  the  accounts  of  the  fiscal  period  183 1  and  submitted  to  discussions 
by  the  Chamber  of  Deputies  in  connection  with  the  subject  of  these 
accounts. 

595 


THE  BUDGET 

plan,  perspicacity  was  its  chief  quality.  The  laws  on  accounts, 
on  the  contrary,  looked  into  the  past,  and  analyzed  and  classi- 
fied precise  facts  and  reliable  figures.  In  this  connection  the 
main  quality  was  no  longer  perspicacity  which  penetrated  the 
future,  but  the  spirit  of  order  which  regulated  the  past.  By 
putting  each  of  them  successively  into  action,  the  Restoration 
obtained  financial  results,  such  as  no  other  period  is  able  to 
show. 

Regulation  of  Accounts  in  England 

On  the  basis  of  these  conclusions,  we  must  expect  to  find  in 
England  a  well-ordered  control.     This  is  actually  the  case. 
Properly  speaking,  the  English  Parliament  does  not  pass  a 
No  Law  of     ^^w  of  regulation.    The  House  of  Commons — notwithstanding 
Regulation      its  supremacy  in  financial  matters — does  not  deem  it  necessary 
to  have  the  budgets  submitted  after  their  execution,  in  order 
to  control  them.     Parliament's  control  over  them  is  none  the 
less  efficient. 
Official  The  British  administrations  at  first  publish  annual  accounts 

Statements  of  their  Operations,  some  of  them  for  statistical  purposes  only, 
others  for  the  sake  of  having  available  accounting  documents, 
The  latter  are:  (i)  The  Statistical  Abstract,  which  contains 
a  summary  of  public  revenues  and  of  public  expenditures,  of 
the  debt,  of  imports  and  exports,  of  shipping  results,  of  the 
operations  of  banks,  of  railroads,  of  street  cars,  of  clearing 
houses,  of  the  post  and  telegraphs,  etc. ;  it  is  a  document  of 
universal  value.^  (2)  The  annual  reports  of  the  commission- 
ers of  customs,^  of  the  commissioners  of  internal  revenues,^ 
of  the  postmaster  general,^  etc. ;  all  are  small  blue  booklets,^ 

1  Statistical  Abstract  for  the  United  Kingdom  in  each  of  the  last 
fifteen  years.  The  English  Government  publishes  also  a  Statistical 
Abstract  for  the  principal  and  other  foreign  countries,  giving  for 
foreign  nations  information  analogous  to  that  which  the  aforesaid 
Statistical  abstract  contains  with  regard  to  Great  Britain. 

2  Report  of  the  Commissioners  of  Her  Majesty's  Custams  and  Ex- 
cise (for  the  year  ended  March  31). 

^Report  of  the  Commissioners  of  Her  Majesty's  Inland  Revenue 
(for  the  year  ended  March  31). 

*  General  Report  of  the  Post  Office. 

'^  These  small  blue  books,  in  spite  of  the  mass  of  information  which 
they  contain,  cost  only  five  or  six  pence  apiece,  or  from  fifty  to  sixty 
centimes.  The  English  taxpayers,  therefore,  if  they  so  desire,  may 
inform  themselves  at  low  cost  as  to  the  nature,  importance  and  dis- 
tribution of  the  taxes  they  are  paying.     Besides,  the  obligation  of 


tion? 


REGULATION  OF  THE  BUDGET 

indispensable  to  those  who  devote  themselves  to  the  study  of 
English  finances,  furnishing,  as  they  do,  valuable  data  on  the 
periodical  movement  of  public  revenues.  (3)  Besides  these 
statistical  publications,  there  are  those  of  an  accounting  na- 
ture issued  yearly  by  the  Treasury  Department,  of  which  the 
finance  account  is  the  first,  and  which  ^  present  the  tables  of 
receipts  and  expenditures  of  the  Exchequer,  between  April  i 
and  March  31,  together  with  the  balances  of  the  accounts  at 
the  beginning  and  at  the  end  of  the  year.  All  operations  for 
revenue  and  expenditure  are  specified  in  detail  and  by  chapter 
in  this  finance  account.  The  Bureau  of  the  Treasury  prepares 
this  on  its  own  responsibility,  and  it  does  not  constitute  as 
yet  an  audited  account,  that  is,  an  account  approved  by  the 
comptroller  and  auditor  general.  (4)  The  audited  accounts, 
which  are  invariably  intended  to  serve  as  the  official  bases 
for  the  control  by  Parliament,  are  the  appropriation  ac- 
counts. 

We  have  already  mentioned  the  term  appropriation  when  what  Is  an 
speaking  of  the  Appropriation  Bill.  An  appropriation  consists  ^pP^^P*"^^" 
of  a  classified  estimate  of  an  expenditure  by  chapter.  In  this 
connection,  the  object  of  the  appropriation  is  to  present  to 
Parliament  the  actual  expenditure  in  order  to  ascertain  its 
correlation  with  the  expenditure  anticipated  in  the  Estimates. 
Each  administration  prepares  its  own  appropriation  account 
through  an  accountable  officer,  and  transmits  it  to  the  comp- 
troller and  auditor  general,  who,  in  order  to  proceed  with  his 
audit,  uses  the  opinions  previously  rendered  by  himself  on  the 
individual  accounts  of  the  accountable  officers  and  proceeds  to 
the  very  seat  of  the  various  branches  of  the  service,  where  all 
the  books  are  put  at  his  disposal.  The  accounts  of  the  civil 
services  form  the  subject  of  a  detailed  audit.  The  accounts 
of  the  department  of  War,  of  the  Navy,  and  of  the  financial 
administrations  are  audited  only  by  making  tests.  The  appro- 
priation accounts — as  soon  as  they  are  provided  with  the  com- 
ments of  the  comptroller  and  auditor  general  and  combined 

rendering  an  annual  account  compels  every  administration  to  re- 
capitulate its  actions,  to  account  for  itself,  to  appear  before  the  public 
at  least  once  in  one  year.  It  would  be  very  useful,  from  these  differ- 
ent points  of  view,  if  the  French  administrations  would  publish 
periodically  an  analogous  report.  This  certainly  is  going  to  be  done 
some  day  and  should  be  started  at  once. 

^  Finance  accounts  of  the  United  Kingdom  of  Great  Britain  and 
Ireland  for  th^  financial  year  .  .  .  ended  March  31.  .  .  . 

597 


Accounts 


THE  BUDGET 

with  the  reports  of  the  latter  in  a  volume  ^ — become  a  point 
of  departure  for  parliamentary  control.    The  House  of  Com- 
mons ^  then  puts  a  parliamentary  commission,  called  the  Com- 
mittee on  Public  Accounts,^  in  charge  of  examining  them. 
Committee  This  committee  *  not  only  examines  the  accounts,  but  sum- 

a"^?"?]^*^  mons  successively  the  accountable  officers  of  each  branch  of 
the  Administration  for  the  purpose  of  questioning  them.  A 
special  room  in  the  Palace  of  Westminster  is  given  over  to 
the  committee.  After  the  accounts  have  thus  been  discussed, 
revised,  completed  and,  if  necessary,  scrutinized  in  all  their 
details,  the  parliamentary  committee  prepares  its  report.  The 
chairman,  who,  by  virtue  of  the  law,  must  report  on  the  sub- 
ject, submits  it  in  several  parts,  the  last  of  which  is  handed 
in  about  two  years  after  the  beginning  of  the  financial  admin- 
istrative period.  He  submits  this  report  to  the  House  of 
Commons,  which  causes  it  to  be  printed  and  distributed.  This 
ends,  in  England,  the  series  of  operations  relating  to  legisla- 
tive control.     No  official  approval  is  given  to  the  report  sub- 

^  The  volume  of  appropriation  accounts  is  divided  into  three  parts, 
relating  to  the  ministry  of  war,  the  ministry  of  the  Navy,  and  to 
the  civil  services. 

2  The  submitting  of  the  appropriation  accounts  to  the  House  of 
Commons  is  done  through  the  intermediary  of  the  Treasury  and 
takes  place  on  the  following  dates:  For  the  Army,  on  February  25; 
for  the  other  services  on  January  21  following  the  preceding  March 
31.  This  makes  a  total  of  ten  or  eleven  months  after  the  end  of  the 
fiscal  year.  On  the  other  hand,  the  comptroller  and  auditor  general 
must  have  received  the  same  accounts  on  December  31  for  the  Army 
and  on  November  30  for  the  other  services. 

3  Committee  on  Public  Accounts.  These  committees  or  commis- 
sions on  public  accounts  were  organized  by  William  III,  right  after 
the  Revolution  of  1688.  After  a  period  of  suspense  in  the  course  of 
the  eighteenth  century,  they  were  reestablished  under  the  ministry 
of  Pitt  in  1786.  Their  duties  have  been  formulated  since  the  begin- 
ning as  follows:  "To  submit  reports  on  such  regulation  as  they 
might  deem  proper  to  establish  for  the  purpose  that  the  taxes  and 
dues  voted  be  collected  and  applied  in  the  most  profitable  way  to  the 
public  services  of  the  Kingdom." 

*  The  members  of  the  commission  of  public  accounts  are  appointed 
by  the  Speaker  of  the  House  of  Commons.  They  meet  every  Wednes- 
day, and  remain  in  session  from  two  o'clock  in  the  afternoon  until 
the  opening  of  the  public  session.  The  report  from  which  we  take 
a  part  of  this  information  prompts  the  information  that  the  English 
Parliament  deems  it  a  point  of  honor  to  bring  into  the  commission 
of  public  accounts  a  certain  number  of  members  of  the  Opposition 
and  carries  its  delicacy  even  as  far  as  selecting  the  chairman  of  the 
commission  from  the  ranks  of  the  Opposition. 

598 


REGULATION  OF  THE  BUDGET 

mitted  by  the  committee  on  public  accounts.  The  House  of 
Commons,  as  a  whole,  does  not  discuss  them  and  does  not  take 
a  vote  on  the  subject.  Each  member  of  the  Commons,  how- 
ever, has  a  right  to  point  out  any  incident,  or  to  make  a  mo- 
tion relating  to  special  points  in  these  reports,  if  they  appear 
to  him  to  warrant  their  being  brought  to  the  attention  of  the 
Chamber;  this  right  has  been  often  invoked.^ 

The  comments  of  the  commissioners  on  public  accounts  have   The  Corn- 
great  authority.     A  summary  of  them  constitutes  a  real  code  "jentsofthe 
of  English  accounting,  giving  on  every  important  and  disputed   sioners  ' 
question  the  solution  intended  henceforth  to  guide  the  adminis- 
trations.    Each   year  volumes   of  public  accounts — together 
with  detailed  tables  and  annexes  containing  the  minutes  of 
sessions,   in  the  course  of  which  the  accounting  officers  of    • 
each  ministry  have  been  questioned  ^ — are  printed  and  distrib- 
uted in  successive  series. 

In  brief,  runs  the  report  of  a  high  French  official,  sent  to 
England  on  a  special  mission : 

"Although  there  is  no  solemn  regulation  of  the  budget  Excellence 
by  law  in  England,  as  in  France,  the  English  Parlia-  of  the 
ment  is  none  the  less  jealous  of  having  the  Crown  strictly   fys^em 
execute  the  budgetary  law.     The  minute  and  unceasing 
intervention  of  the  committee  on  public  accounts  is  a 
stimulus  to  all  parties.     Furthermore,  the  surprising  fea- 

^  The  Scudamore  affair,  in  1873,  relating  to  an  exceeding  of  the 
appropriation  by  20,300,000  francs  on  the  part  of  the  administration 
of  the  posts,  at  the  time  of  purchasing  the  telegraph  lines,  is  cited  as 
an  example  in  this  connection.  Pointed  out  in  the  report  of  the 
committee  of  public  accounts,  it  was  taken  up  by  Parliament  as  the 
result  of  a  special  motion,  and  caused  very  lively  discussions. 

2  A  general  collection  of  reports  of  the  committees  of  public  ac- 
counts from  1857  until  1887  has  been  collected  in  a  special  volume 
prepared  through  the  care  of  the  comptroller  and  auditor  general 
under  the  following  title:  Handbook  to  the  Reports  from  the  Com- 
mittee of  Public  Accounts,  with  an  index,  prepared  and  edited  under 
the  directions  of  the  Comptroller  and  Auditor  General.  Ordered  by 
the  House  of  Commons  to  be  printed,  March  14,  1888.  This  work, 
which  begins  with  an  alphabetical  table  covering  eighty-seven  pages, 
furnishes  a  brief  resume  of  every  solution.  This  alphabetical  table 
refers  for  more  details  to  the  text  of  the  reports,  which  are  divided 
into  numbered  paragraphs  and  classified  under  distinct  headings, 
which  are  allotted,  each  of  them,  to  the  statement  of  a  particular 
rule,  emphasized  as  clearly  as  possible.  The  entire  volume  contains 
558  pages  in  octavo.  This  useful  manual  of  English  budgetary 
accounting  is  continued  and  kept  up  to  date. 

599 


THE  BUDGET 

ture  of  the  English  system  is  dispatch;  the  fiscal  period 
is  closed  twenty-eight  months  after  the  first  shilling  has 
been  disbursed."  ^ 

We  can,  therefore,  applaud  the  excellence  of  English  finan- 
cial history,  which  rests,  as  in  all  regularly  organized  coun- 
tries, on  the  essential  basis  of  a  firmly  established  legislative 
control. 

*  Bulletin  de  statistique  du  ministere  des  finances^  August,  1888. 


600 


•  CHAPTER  XXXI 
RESUME  OF  BUDGETARY  FORMALITIES 

How  the  Budget  Is  Prepared;   How  the  Revenues  Are  Estimated; 

Details  of  Budgetary  Routine;  Three  Forms  of  Budget  Control; 

Stourm's  Reason  for  Writing. 
The  Budgetary  Formalities:  Tend  to  Stop  Infractions;  Clearness  a 

Factor;  Blunders  Due  to  Ignorance;  The  Virtue  of  Clarity;  The 

Will   of  the   Legislature;   The   Budget   Returns   for   Justification; 

The  Budget  Is  Justified. 

Stripped  of  all  comment  relating  to  their  historical  origin 
and  their  reason  for  existence,  be  it  constitutional  or  financial, 
the  budgetary  formalities  can  be  recapitulated  in  a  few  lines. 

Each  minister  prepares  the  budget  of  his  department  with    How  the 
the  assistance  of  the  hierarchical  staff  of  agents  assigned  to   p"^jfa^red^ 
him.    This  budget,  if  prepared  on  a  date  too  distant  from  the 
opening  of  the  fiscal  year,  will  lack  exactness  in  its  estimates. 
Many  countries,  therefore,  in  order  to  bring  these  dates  closer 
together,  have  broken  away  from  the  calendar  year;  this  re- 
form has  not  been  adopted  in  France.     The  Minister  of  Fi- 
nance recapitulates  the  budgets  of  his  colleagues  and  is  at 
times  even  vested  with  authority  to  revise  and  control  them. 
In  all  cases,  however,  he  adds  his  own  estimates  of  revenues 
to  their  estimates  of  expenditures  and  presents  to  the  legisla- 
tive body  the  general  budget  plan,  preceded  by  his  statement 
of  supporting  arguments.    Budgetary  accounting  is  kept  either 
by  administrative  periods  or  by  fiscal  periods,  as  each  country 
finds  best  suited  to  its  purposes.     The  revenues  and  expendi- 
tures are  shown  in  exteftso  in  all  regular  budgets.    This  is  the   How  the 
comprehensive  system  as  opposed  to  that  of  specialization.   In   Revenues 
France,  the  revenues  are  estimated  automatically  on  the  basis  Estimated 
of  the  results  of  the  last  known  fiscal  period.     Elsewhere,  the 
probable  return  is  calculated  according  to  events.     The  esti- 
mates of  expenditures,  because  of  their  nature,  yield  with  great 
difficulty  to  the  yoke  of  regulations  which  distinguish  between 
estimated    appropriations    and    limited    appropriations.      In 
France,  the  body  of  the  budget  plan,  until  a  few  years  ago, 

6oi 


THE  BUDGET 


Details  of 
Budgetary 
Routine 


Three 
Forms  of 
Budget 
Control 


was  composed  of  five  different  budgets.  Nowadays,  only  the 
general  budget  with  the  annexed  budgets  are  in  existence. 
Abroad,  the  principle  of  unity  prevails.  The  extraordinary 
budgets  everywhere  show  a  tendency  to  disappear.  The  voting 
of  the  budget  by  the  legislative  body  is  preceded  by  prepara- 
tory studies  made  by  legislative  commissions  [or  committees], 
which  are  permanent  or  annual,  and  made  openly  or  behind 
closed  doors;  they  examine  the  governmental  plan,  draft  a 
report  and  submit  their  suggestions  to  the  legislature,  where 
it  is  discussed  as  a  whole  and  by  article.  In  France,  the  voting 
is  done  by  more  or  less  extensive  subdivisions  called  chapters. 
The  revenues  are  voted  only  after  the  expenditures  have  been 
fixed.  When  the  lower  chamber,  composed  of  the  direct  rep- 
resentatives of  the  country,  has  completed  its  work,  the  upper 
chamber  intervenes  by  virtue  of  its  special  prerogatives  con- 
tained in  every  constitution.  Even  after  the  budget  bill  has 
been  definitely  passed — the  refusing  to  vote  it  is  but  a  threat — 
unforeseen  demands  may  still  arise  to  cause  the  voting  of  addi- 
tional appropriations.  Conversely,  unused  appropriations  are 
annulled.  The  execution  of  the  budget  is  entrusted  to  the 
executive  power.  The  Minister  of  Finance  supervises  the  col- 
lection of  revenues  and  the  payment  of  expenditures,  and  cen- 
tralizes the  resources  of  the  State  in  order  to  apply  them  to 
the  public  needs.  The  ordonnatciirs,  in  the  majority  of  cases, 
are  not  under  the  supervision  of  a  minister.  Each  country  or- 
ganizes more  or  less  effective  systems  of  supervision  over  the 
ordonnatenrs ;  among  these  the  preventive  system  holds  the 
first  place.  The  budgetary  fiscal  period,  in  the  countries  which 
have  adopted  this  system  of  accounts,  is  closed  at  the  expira- 
tion of  a  certain  period  of  time.  Besides,  the  tardy  creditors 
are  subject  to  a  shorter  statute  of  limitation  than  that  pre- 
scribed by  the  civil  code;  at  the  end  of  the  period  of  limita- 
tion, the  budget  expires.  The  control  of  the  budget  appears 
in  three  different  forms — administrative,  judicial  and  legisla- 
tive. As  soon  as  their  term  is  completed,  the  accountable  offi- 
cers submit  their  reports  to  the  judgment  of  a  tribunal,  the 
Cour  des  Comptes,  or  some  analogous  institution.  The  or- 
donnatenrs are  subjected  only  to  legislative  control,  in  case 
the  preventive  control  referred  to  above  fails  to  reach  them. 
The  Conr  des  Comptes,  however,  formulates  indirectly  its  ob- 
servations on  the  subject  of  irregularities  ascertained  and 
charged  against  the  ordonnatenrs.  The  legislative  commis- 
sions verify  the  governmental  figures  and  draft  a  report  on  the 

602 


RESUME  OF  BUDGETARY  FORMALITIES 

basis  of  which  the  legislature  approves  the  accounts  of  the 
expired  fiscal  period. 

This  is  the  skeleton,  to  speak  figuratively,  of  budgetary  for-  stourm's 
malities,  a  dry  frame  of  technical  procedure,  which  could  never  ^^^?"  *°' 
in  itself  have  filled  the  thirty  preceding  chapters.  However,  "  °^ 
many  sections  of  these  chapters  have  been  devoted  to  the  ori- 
gins of  each  of  the  regulations,  to  their  historical  evolution,  to 
ascertaining  their  constitutional  or  financial  purpose,  to  em- 
phasizing the  advantage  of  their  being  preserved  or  reformed, 
to  discovering  in  foreign  countries  examples  of  achievement 
which  might  be  of  use  to  France,  etc.  Without  recording  all 
details  contained  in  our  book  on  this  subject,  we  ask  only  in 
conclusion,  whether  the  budgetary  formalities  have  deserved 
so  long  a  description.  Have  the  importance  and  the  efficacity 
of  the  services  they  perform  warranted  it?  After  all,  the 
objection  may  be  urged  that  the  strict  observance  of  these 
rules,  in  itself,  would  not  bring  financial  prosperity.  That 
cannot  be  brought  about  through  the  operation  of  a  machine. 
Prosperity  has  deeper  sources,  viz. :  Wisdom,  clearsightedness, 
firmness  against  abuses,  a  spirit  of  economy,  etc.  These  vir- 
tues, however,  the  quality  of  which  no  one  contests,  are  the 
real  sources  of  financial  prosperity;  and  they  are  not  vigor- 
ous. So  many  enemies  threaten  their  existence  that  they  can 
scarcely  come  into  being,  much  less  grow  and  thrive.  Reen- 
forcements,  defenders,  and  guardians  alone  prevent  their 
yielding  to  the  almost  universal  attack  of  all  those  seeking  to 
pay  less  than  they  owe  or  to  collect  more  than  is  their  due.  » 
Without  reenforcements,  guidance  and  the  protection  by 
budgetary  formalities,  what  would  become  of  wisdom,  econ- 
omy, firmness  and  prudence  if  left  to  their  own  resources? 
In  a  word,  the  formalities  [budgetary  procedure]  constitute 
their  necessary  palladium. 

The  Budgetary  Formalities 

Some  of  the  budgetary  machinery  forms  a  substantial  obsta-  Tend  to 
cle  against  abuses,  by  automatically  stopping  the  infractions   Stop 
under  way.     When  those  in  authority  find  the  road  barred,   in^^^actions 
they  are  at  least  compelled  to  consider  before  overriding  the 
obstacles.    Thus  the  solemn  sanction  given  to  the  revenues  and 
to  the  expenditures  by  the  discussion  and  the  voting  of  the 
budgets,  forces  the  representatives  of  the  country  to, respect 
their  own  work;  the  equilibrium  which  they  have  laboriously 

603 


THE  BUDGET 


Clearness 
a  Factor 


Blunders 
Due  to 
Ignorance 


established  through  a  long  series  of  reports  and  discussions 
could  not  very  well  be  upset  by  a  trifle.  The  more  laboriously 
the  budgetary  estimates  were  calculated,  the  more  do  they  re- 
sist the  destruction  of  their  arrangements,  and  the  more  pub- 
licity do  they  gain.  So  far  as  the  executive  power  is  con- 
cerned, it  is  rigidly  restrained  within  fixed  limits  by  the  esti- 
mates of  the  budget.  Each  subdivision  of  the  fiscal  law,  as 
soon  as  the  legislature  has  voted  it,  constitutes  an  island  for 
the  executive  power  in  the  interior  of  which  it  remains  irrev- 
ocably confined,  unless  it  shall  commit  vicious  infractions. 
In  certain  countries,  the  chambers  deny  themselves  the  right 
to  initiate  suggestions  relating  to  increases  of  expenditures  or 
reductions  of  revenues.  Judging  that  such  a  course  might 
prove  dangerous  in  certain  fields  of  their  own  sphere  of  action, 
the  chambers  have  had  the  wisdom  to  forbid  it  entirely.  With 
regard  to  additional  appropriations,  which  have  particularly  to 
be  feared,  they  have  been  closed  to  the  executive  power,  except 
in  cases  of  exceptional  emergency.  The  all-powerful  legisla- 
ture can  move  freely  in  this  sphere,  although  certain  restric- 
tions retard  its  own  evolutions,  in  case  the  latter  threaten  to 
become  abusive.  Finally,  the  control  in  its  many  forms,  stays 
the  hand  of  the  executive  agents,  opposes  itself  to  infractions, 
paralyzes  bad  intentions,  compels  everyone  first  to  take  count 
of  himself  before  accounting  to  the  authorities  charged  with 
passing  upon  him.  In  fine,  this  first  of  checks  either  produces 
an  absolute  stop  which  renders  any  abuse  impossible,  or  brings 
about  a  delay  of  sufficient  duration  to  allow  the  ideas  of  wis- 
dom, prudence,  economy,  etc.,  to  gain  the  upper  hand. 

In  the  second  place,  the  formalities  indicate  the  right  way  by 
inculcating  clearness.  Clearness  enlists  universal  support; 
everyone  preaches  clearness  more  or  less  sincerely.  Clearness 
heads  all  programs.  Whence  comes  this  unanimous  agreement 
in  favor  of  clearness?  In  itself  it  procures  no  real  advantage, 
because  it  limits  itself  to  disclosing  existing  situations.  The 
task  of  the  public  appears  completed  as  soon  as  it  has  illumined 
the  situation.  This  task,  however,  is  not  so  lightly  to  be  dis- 
posed of.  Once  the  elements  of  public  wealth  are  ascertained 
as  to  their  details  and  as  to  their  totals,  right  solutions  present 
themselves  and  the  straight  road  becomes  evident.  All  that  is 
needed  is  honesty  enough  to  enter  upon  that  road. 

However,  if  the  improbable  existence  of  an  assembly,  bent 
on  bringing  about  the  ruin  or  destruction  of  its  own  country, 
can  be  imagined,  clearness  would  certainly  be  useless  to  it. 

604 


RESUME  OF  BUDGETARY  FORMALITIES 

But  such  a  reunion  of  legislators  can  never  be.  Even  the  Con- 
vention's blunders  were  due  to  ignorance  aggravated  by  weak- 
ness, aberration  of  mind,  and  the  terrors  of  the  times.  We 
have  shown  this  in  another  book.  Nobody  of  his  own  free 
will  jumps  over  a  precipice.  Everyone,  on  the  contrary, 
strives  for  the  good  when  they  clearly  see  the  way.  Enlight- 
ened public  opinion,  though  an  abused  legend,  constitutes  no 
mean  panacea.  It  is  the  point  of  departure  necessary  for  every 
efficacious  change.  If  public  opinion  should  come  clearly  to 
appreciate  the  advantages  of  economy,  financial  prosperity 
would  become  inevitable. 

Thus,  regulations  intended  to  disseminate  the  virtue  of  clear-  '^^e  Virtue 
ness  are  to  be  found  galore  in  our  accounting  codes.  The  °  ^^'^^ 
principles  of  comprehensiveness  and  of  unity  are  proclaimed 
because  they  contribute  to  clearness.  For  the  same  reason, 
the  opening  date  of  the  fiscal  period  is  brought  as  close  as  pos- 
sible to  that  of  the  estimates,  the  system  of  accounts  by  admin- 
istrative period  is  preferred  to  accounts  by  fiscal  period,  the 
quinquennial  statute  of  limitation  disposes  of  old  claims,  the 
statements  of  supporting  arguments  precede  the  budget  plans, 
the  fiscal  laws  are  drafted  and  subdivided  in  a  methodical 
order,  the  accounts  of  the  ministers  and  the  general  statement 
of  finances  are  prepared  in  accordance  with  rational  programs, 
the  Cour  des  Comptes  establishes  and  publishes  its  general 
declarations  for  the  year  and  the  fiscal  period,  the  laws  of 
regulations  act  in  a  solemn  way,  etc. 

Indeed,  all  the  formalities  mentioned  herein  tend  to  con- 
tribute to  clearness. 

The   first   chapters   of  this   book   have   indicated  how  the 
budget  prerogative  was  struggled  for  and  won  by  the  repre- 
sentative bodies  in  constitutional  states.     As  soon  as  this  vic- 
tory was  complete,  the  regulations  endeavored  to  entrench  it. 
This  is  the  third  and  last  purpose  of  the  budgetary  formalities ; 
they  enforce  respect  for  the  will  of  the  legislature.     All  the  The  Will 
work  of  the  preparation  of  the  budget  looks  to  its  meeting  the  J^  ^}^^ 
wishes  of  the  legislature.     The  careful  estimate  of  revenues,     ^^'^  ^^"^^ 
the  division  of  expenditures  by  ministry,  section  and  chapter; 
the  determining  of  the  opening  date  of  the  fiscal  year;  the 
drafting  of  the  statement  of  supporting  arguments ;  the  form 
of  the  volume;  its  disclosures,  etc.,  are  combined  for  the  pur- 
pose of  facilitating  the  work  of  the  legislature.     When  the 
budget  is  applied,  the  codes  of  accounting  at  each  step  restrain 
the  executive  power,  preventing  its  deviation  with  impunity 

605 


THE  BUDGET 


The  Budget 
Returns  for 
Justification 


The 

Budget  Is 
Justified 


from  the  line  traced  by  the  legislature,  forbidding  the  collec- 
tion of  unauthorized  taxes,  forbidding  the  disbursal  of  ex- 
penditures in  excess  of  appropriations,  and  the  passing  of  the 
limits  of  chapters,  etc.  Finally,  the  facts  fulfilled  return  for 
judgment  before  their  earlier  judges,  who,  again  are  the  rep- 
resentatives of  the  country.  The  government  then  produces 
its  accounts,  submits  its  justifications  to  the  authors  of  the 
original  budgets,  asking  them  to  sanction  the  operations  exe- 
cuted in  conformity  with  their  orders.  The  budget  is  pre- 
pared under  the  eyes  of  the  representatives  of  the  country; 
it  is  voted  by  them,  is  executed  in  conformity  with  their  or- 
ders, and  comes  back  before  the  assembly  of  the  representa- 
tives of  the  country  in  order  to  be  finally  approved.  . 

Material  obstacles  opposed  to  infractions,  clearness  of  the 
total  of  the  operations,  and  the  guarantee  of  budgetary  power 
in  the  hands  of  its  legitimate  holders,  are  the  three  main  serv- 
ices rendered  by  these  formalities. 

Their  merits  would  be  still  further  emphasized,  if  we  should 
contrast  the  evils  that  work  in  their  absence,  if  we  should  re- 
call the  troubles,  the  abuses,  the  disorders  of  revolutionary 
periods,  or  the  periods  of  the  old  regime,  which  were  shorn 
of  formalities.  If  a  country  has  no  budgets,  no  accounts;  if  it 
is  ignorant  of  the  amount  of  its  revenues,  of  its  expenditures 
and  its  deficits ;  if  it  no  longer  knows  how  its  money  is  spent 
or  whence  it  comes — that  country  is  on  the  verge  of  ruiiM  Ex- 
perience has  proved  that  often  enough.  It  is  possible  that 
actual  conditions  so  becloud  these  memories  that  one  fails  to 
appreciate  the  reassuring  measure  of  things  today.  It  would 
be,  of  course,  of  great  advantage,  if  accounting,  which  is  im- 
proving from  day  to  day,  could  end  the  disastrous  increase  of 
expenditures;  the  regulation  of  this  increase,  however,  does 
preserve  us  at  least  from  the  worst  enemy  of  public  finance^ 
chaos. 


INDEX 


Accountable  officers,  indi- 
vidual accounting  period  or 
annual,  122;  alternative, 
124-126;  paying  over  of 
funds  on  their  receipt,  445- 
446;  hierarchy,  service, 
486-487;  payments,  485-492; 
right  of  requisition  of,  492- 
494;  mortgage  bonds,  502, 
541,  54;j;  administrative 
control,  judicial,  legislative, 
543,  544-549;  accounting  by 
fiscal  periods,   549. 

Accountancy.  See  Annual  ad- 
ministrative period,  Ac- 
countable officers.  Fiscal 
period,  Minister  of  finance, 
Control. 

Accounting  by  double  entry, 
inaugurated  by  Mollien,  459, 
544-548. 

Accounts,  active  and  inactive, 
of  unspent  balances  in 
Italy,    520,   531-533- 

Additional  credits,  causes, 
dangers  of,  99,  190,  194, 
336-338;  divers  measures 
designed  to  combat  them, 
338-363;  supplementary  and 
corrective  budgets,  341- 
348;  history  of,  350-356; 
actual  legislation,  extraor- 
dinary supplementary  and 
complementary  credits,  230, 
356-363;  statistics  of,  367- 
372;  additional  credits  in 
Belgium,  Prussia,  England, 
Russia,  Italy,  372-380. 

Ancien  regime,  Etats  Gene- 
raux,  Parlements,  25-38 ; 
chief  Ministers  of  Finance, 
74-76  ;  superintendents, 
chambers  of  justice,  546- 
550;  financial  year,  loi ;  re- 


duction of  expenses,  141- 
143;  extraordinary  affairs, 
228-230 ;  paymasters  inde- 
pendent of  general  control, 
486-487;  absence  of  closing 
date  for  fiscal  period,  517, 
518;  lapses  in  control,  518, 
519,  535-540. 

Annexed  budgets,  coinage, 
savings  banks,  national 
printing  shop,  central 
schools,  state  railways,  etc., 
215-222;  created  in  1833, 
229. 

Annual  administrative  period, 
definition,  121-123;  advan- 
tages of  accounts  by  ad- 
ministrative periods,  adopt- 
ed in  England,  in  Italy  and 
in  commerce,  122,  132-137, 
142;  combination  of,  possi- 
ble with  accounts  by  fiscal 
period,  139-142;  closing  of, 
in  England  and  Italy,  531- 
533 ;  accountable  officers 
keep  their  accounts  by  ad- 
ministrative periods,  541 ; 
general  statements  permit 
transfer  of  accounts  by  ad- 
ministrative period  to  ac- 
counts by  fiscal  period,  569- 
572. 

Annuality  of  Budget,  319-335; 
exceptions,  319-320;  effort 
to  establish  a  biennial 
budget  in  Germany,  320; 
consolidated  funds  in  Eng- 
land, 321-324;  divisions  over 
budget  in  Germany,  323-325  ; 
dousiemes  provisoires,  325- 
330;  vote  on  accounts  in 
England,  330-334- 

Annulment  of  credits,,  nature 
of,    prescribed    annulments, 


607 


INDEX 


and  annulments  to  order, 
363-367;  statistics,  365; 
abuses  which  they  prevent, 
129,  130,  366-367;  reports 
of  credits,   533-534- 

Appropriations,  appropriation 
act  in  England,  332,  333, 
380. 

Arnaune,  Auguste,  author  of 
treatise  on  money,  ex- 
change, and  other  financial 
subjects,  93. 

Audibert,  former  director  gen- 
eral, and  procurator  for 
Cour  des  Comptes,  493,  494, 
501. 

Audiffret,  Marquis  d*,  author 
of  Systeme  financier  de  la 
France,  2,  49,  90,  449,  464, 

477- 
Audit  office,  92,  93,  505,  580, 

597- 
Austria-Hungary,     108,     164, 
257,  282.  , 

Bailly,  Inspector  General  of 
Finance,  author  of  L'histoire 
financiere     de     la    France, 

33. 

Bank  of  France,  66,  88;  ac- 
count of  Treasurer  with 
Bank  of  France,  450,  452, 
467,  468;  delinquent  credi- 
tors at  different  periods, 
452,  453;  relation  of  Bank 
of  England  to  state,  137, 
138,  470-472,  505-508,  531; 
special  account  of  paymaster 
general,  505,  507,  508,  531; 
National  Bank  of  Belgium, 
cashier  of  state,  472,  474; 
Bank  of  Germany,  472 ;  plan 
to  extend  services  of  Bank 
of  France,  468,  469-470. 

Barbe-Marbois,  Minister  of 
Treasury,  1801-1806,  first 
president  of  Cour  des 
Comptes,  77,  loi,  149,  455, 
456,  457,  477,  488,  559,  593, 

595- 
Beds  of  justice,  36,  37,  507. 
Beernrert,     Minister     of     Fi- 


nance, President  of  Coun- 
cil in  Belgium,  259,  373. 
Belgium,  budgetary  initiative, 
62 ;  douziemes  provisoires, 
113,  330,  331;  fiscal  period, 
132;  universality,  165,  219; 
estimate  of  receipts,  188- 
189;  extraordinary  ex- 
penses, 259,  260;  commis- 
sion on  budget,  282;  senate, 
310;  complementary  credits, 
363;  additional  credits,  373, 
374;  preventive  control  of 
Cour  des  Comptes,  507-508, 
582;     national     bank,     472, 

474. 

Boiteau,  Paul,  author  of 
Fortune  publique  et  finances 
de  la  France,  of  article 
"Budget"  in  Dictionary  of 
Finance,  2,  109. 

Bonds,  treasury,  225,  271. 

Boutmy,  Emile,  author  of 
Etudes  de  droit  constitu- 
tionnel,  etc.,  founder  of 
School  of  Political  Science, 
10,  308,  309,  310,  322. 

Budget,  definition  of,  1-5;  no 
law  prescribes  establish- 
ment of,  49;  preparation 
of,  51-277;  financial  year, 
99-112;  qualities  which  it 
should  possess,  145-146;  uni- 
versality and  specialization, 
146-168;  budgetary  esti- 
mates, 169,  170,  198;  books 
on  budget  plan,  199-234; 
general  budget,  202,  203, 
215;  extraordinary  budget, 
235,  260;  budget  on  special 
resources,  261,  266;  budget, 
215,  222;  titles  to  budget 
laws,  202,  203;  relation  of, 
to  Treasury,  267,  270;  an- 
nexed documents,  232-234; 
commission  on,  280-291 ; 
vote  by  chapters,  295-304; 
vote  on  law,  304-305 ;  an- 
nual vote  with  exceptions, 
319-335;  vote  of  senate, 
307-318;  definitive  law,  318; 
refusal  to  vote  budget,  381- 


608 


INDEX 


389;  execution  of,  391-534; 
closing  of,  517-530;  control 
of>  535-585;  regulation  of, 
586-597;  importance  of 
budgetary  formalities,  601- 
606;  totals  of  principal 
foreign  budgets,  252-261. 

Budgetary  estimates,  wisdom 
and  sincerity  of,  169-171 ; 
rules  covering  receipts,  171- 
188;   expenditures,    188-198. 

Budgetary  formalities,  resume 
of,  601-603;  purpose  of, 
603-606. 

Budgetary  initiative,  in  Eng- 
land, 53-58;  in  France,  58- 
62;  in  Italy,  Belgium,  and 
United   States,   62-63. 

Budgetary  prerogative,  at- 
tribute of  sovereignty,  510, 
605;  origin  and  develop- 
ment in  England,  9-19;  in 
United  States,  18-20;  in 
Prussia,  20-23;  in  France, 
24-29,  306-307;  may  be  car- 
ried to  point  of  refusing  to 
vote  budget,  381-389. 

Budgetary  specialization,  vote 
by  ministry,  section,  chapter, 
article,  history  of  progress 
of  specialization,  47,  48,  295- 

305. 
Budgets  on  special  resources, 

composition,    definition    of, 

261-266;    departmental    and 

communal      budgets,      non- 

valeurs,  etc.,  262-266. 
Buffet,    Senator,    Minister   of 

Finance  in   1870,    194,  304, 

328. 
Burdeau,  deputy,   reporter  of 

budget,  Minister  of  Finance, 

173,  194,  252,  521. 
Bureau    of    accountancy,    44, 

447,  501,  589,  590,  59i»  592. 

Caillaux,  deputy.  Minister  of 
Finance,  author  of  im- 
portant treatise  on  Customs 
duties  in  France,  72,  98,  99, 
161,  173,  252,  274,  277,  291, 
371,  464,  480,  499- 


Caisse  des  Depots  et  con- 
signations, 87,  88,  446, 
447- 

Carnot,  President  of  Republic, 
Minister  of  Finance,  1885- 
1886,  183,  211,  214,  233,  251, 
337,  466,  467. 

Centimes  additionnels,  262, 
263,  392. 

Central  administration,  prepa- 
ration of  budget,  63-65,  96- 
98 ;  central  administration 
of  finances,  80-87,  475-478; 
divers  abuses  and  answers 
to  reports  of  Cour  des 
Comptes,  580 ;  administra- 
tive publications  in  England, 
162,  163,  199,  376-378,  596- 

597,  598-599- 
Cerboni,     Giuseppe,     Director 
General    of    royal    account- 
ing bureau  of  Italy,  137,  532, 

563,  583. 

Chabrol,  de.  Minister  of 
Finance,  1829- 1830,  author 
of  Rapport  au  Roi  sur  V Ad- 
ministration des  Finances, 
165,  442. 

Chambers  of  justice,  538-539. 

Chancellor  of  Exchequer,  in 
England,  55-59,  89-94,  106- 
108,  132-135,  183-185,  253- 
255,  311,  331,  332,  378,  379, 
596,  597. 

Chapter  [Chapitre'},  definition 
of,  299;  establishment  of 
right  to  vote  by  chapters,  48, 
300-304;  number  of  chapters 
in  French  budget,  301 ;  in 
English  budget,  303;  sub- 
ordinate subdivisions,  ar- 
ticles, and  paragraphs,  295, 
301-304. 

Chevrey-Rameau,  former  in- 
spector of  finance  and  Di- 
rector General  of  Public 
Accounting,  211,  523,  524. 

Civil  list,  17,  18,  42,  43,  32i, 
322. 

Cochery,  Georges,  Deputy, 
Minister  of  Finance,  59, 
130,   523- 


609 


INDEX 


Colbert,  Comptroller  General 
under  Louis  XIV,  67,  73- 
76,  219,  546,  554. 

Collectors,  alternative  and  tri- 
ennial, under  old  regime, 
124-126;  of  direct  taxes, 
397-404;  rural,  409-410; 
traveling,  413,  419;  princi- 
pal and  special,  for  indirect 
taxes,  407,  413,  419;  for 
registration,  433-436;  prin- 
cipals and  subordinates  for 
customs,  426-427. 

Commission  on  verification  of 
accounts  of  ministers,   572- 

574,.  587. 
Commissions  on  budget,  defini- 
tion, 280;  mode  of  appoint- 
ment of,  280-281 ;  public  and 
non-public  sessions,  280-282 ; 
permanent  and  temporary 
commissions,  282-289 ;  re- 
ports and  reporters,  289-290, 

369,  371- 

Commitments  for  expendi- 
tures, 478-480,  500-510. 

Committee  of  House,  in  Eng- 
land and  United  States,  281, 
283,  284;  under  Revolution, 
284-287;  in  1848,  287,  288; 
committee  on  revenues  in 
England,  330,  331 ;  on  public 
accounts,  597-599- 

Comptroller  and  auditor  gen- 
eral in  England,  505-507, 
580,  581,  597,  598. 

Comptroller  of  direct  taxes, 
394-398;  of  indirect  taxes, 
412-413;    of    customs,    424- 

427-  .      ^ 

Consolidated  funds  in  Eng- 
land, 17,  18,  92,  93,  106,  321- 
323 ;  effort  to  introduce  it  in 
France,  158-322. 
Consulate,  44,  45,  76,  126,  148, 
149,  219,  351,  399,  442,  454- 
459,  478,  479»  518,  558. 
Control,  disadvantages  of  de- 
lay in,  130-132;  multiplicity 
of  organizations  for  control 
of  indirect  taxes,  406-444; 
control    of    revenues,    445; 

6 


control  of  Minister  of  Fi- 
nance over  his  colleagues, 
483-494,  503 ;  control  of  dis- 
bursing service  in  England, 
in  Belgium,  in  Italy,  504- 
515;  troubles  which  follow 
absence  of,  535-541 ;  admin- 
istrative, judicial  and  legis- 
lative, 543-585 ;  control  over 
accountable  officers,  549- 
563 ;  over  ordonnateurs,  548, 
565-585;  Cour  des  Comptes 
in  France  and  foreign  coun- 
tries, 551-585;  preventive 
control  in  England,  Bel- 
gium, and  Italy,  505-513, 
580,  585;  law  of  accounts 
rendered      by      Parliament, 

586-599. 

Corrective  budgets,  in  France 
and  Italy,  341-346. 

Corvetto,  Minister  of  Finance 
from  September,  181 5,  to 
December,  18 18,  328,  594. 

Costs  of  collecting  taxes,  total 
of,  carried  in  budgets  of 
France  and  other  countries, 
148-152,  162-164. 

Council  on  finances,  89. 

Cour  des  Comptes  [Court  of 
Accounts],  ancient  chamber 

.  of  accounts,  551-556;  com- 
mission on  accounts  under 
Revolution,  556,  559;  pres- 
ent Cour  des  Comptes,  com- 
position, judicial  and  legis- 
lative attributes,  87,  88,  155- 
158,  559'  561,  563;  judge  of 
accountable  officers,  438-549 ; 
have  no  jurisdiction  over 
ordonnateurs,  548;  annual 
and  fiscal  reports;  574,  575, 
587;  annual  report  to  Chief 
Executive,  575-580;  Court 
of  accounts  in  Prussia,  in 
Belgium,  in  Italy,  etc.,  142, 
507-513,  580,  585;  immedi- 
ate verification  of  minis- 
terial accounts  in  Italy,  141, 
584,  585 ;  preventive  control 
in  Belgium  and  Italy,  504, 
515,  580,  584;  proposed  re- 


10 


INDEX 


forms  in   France,  512,   513, 

585. 

Credits,  definition  of,  188- 
189;  estimated  and  limited 
credits,  188-189;  nomencla- 
ture of  voting  service,  230; 
control  of  legislative  credits 
in  France,  483-492;  exceed- 
ing of  credits,  495-504,  582, 
584 ;  additional  credits,  347- 
363 ;  credits  from  closed  and 
extended  fiscal  periods,  359, 

524-530- 

Curators,  of  Treasury  in 
Prussia,  515. 

Customs,  organization,  active 
and  stationary  service,  423- 
433;  composition  of  cus- 
toms bureau,  424-427;  cus- 
toms guards,  lieutenants, 
captains,  inspectors  and  di- 
rectors, 427-433- 

Decree  of  May  31,  1862,  on 
public  accounting,  definition 
of  budget,  1-40;  role  of 
Minister  of  Finance,  70; 
definition  of  fiscal  period, 
117,  119,  121;  commission 
on  revision,  119,  468;  defi- 
nition of  administrative 
period,  121 ;  duties  of  col- 
lector, 152;  interdiction  on 
increase  of  ministerial 
credits,  152-153;  stages  of 
progress,  155;  credits,  189; 
estimate  of  expenditures, 
197;  universality,  152,  213, 
214;  no  definition  of  ordi- 
nary budgets,  202 ;  budgetary 
specializations,  299;  cor- 
rective budgets,  341,  346; 
complementary  credits,  360, 
361 ;  responsibility  of  ac- 
counting officers,  438-440 ; 
special  and  general  col- 
lectors, 446-447 ;  ordonna- 
teurs  and  accountable  of- 
ficers, 541 ;  issuing  of 
vouchers  for  payment,  481 ; 
role  of  Minister  of  Finance 
in  matters  of  payment,  483, 


500;  monthly  distribution  of 
funds,  483;  ministerial  re- 
sponsibility, 500;  central  ac- 
counting bureau  of  min- 
isters, 482-483 ;  regularity  of 
vouchers,  481,  482,  485,  492; 
regularity  of  payments,  487, 
488,  489;  right  of  requisi- 
tion, 493;  execution  of 
budget,  494;  expenses  for 
closing  fiscal  period,  521, 
522,  526;  lapsed  fiscal 
periods,  528,  530;  accounts 
of  accountable  officers,  549; 
administrative  control  over 
ordonnateurs,  543;  accounts 
of  ministers,  568,  571 ;  de- 
finitive account  of  receipts, 
569;  responsibility  of  ordon- 
nateurs, 566,  567;  responsi- 
bility of  accountable  officers, 
446-447 ;  general  accounts 
of  finance,  571. 

Departmental  budgets,  262- 
264. 

Direct  estimates,  171,  183-188, 
189. 

Direct  taxes,  mode  of  esti- 
mating, 172-188;  place  of, 
in  budget,  208-211;  special 
laws,  209,  210;  comptrollers, 
inspectors,  directors,  389- 
398;  examiners,  special  re- 
ceivers and  treasurers  gen- 
eral, rolls,  notices,  attach- 
ments, 398-404,  468;  re- 
sponsibility of  collecting 
agents,  402-404;  resume  of 
character,  404,  438-441;  in- 
direct taxes,  their  estimate 
and  statistics,  171-182;  place 
of,  in  budget,  211 -212;  char- 
acter of,  422,  438-441. 

Directors,  of  direct  tax,  397, 
398,  400;  of  indirect  tax, 
407,  421,  422;  of  registra- 
tion, 437,  438;   of  customs, 

432,  433- 
Directory  [Directotre'],  3,  no, 

455,  558.         .     .         ^  ^   . 
Douzieme  proinsoires,   defini- 
tion of,  325;  operation  of, 


61 


INDEX 


in  Belgium,  112-113;  history 
of,  in  France,  325-330;  vote 
on  accounts  in  England, 
330-334;  character  of,  330- 
334. 

Dubois  de  TEstang,  inspector 
general  of  finance,  author 
of  article,  "Budget,"  in 
Dictionary  of  Political 
Economy,  297. 

Du  Pont  de  Nemours,  31-34. 

England,  foundation  of  budg- 
etary prerogative,  9-20 ;  war 
with  United  States,  20-22; 
parliamentary  initiative,  55- 
59;  bureau  of  treasury,  90- 
94;  financial  year,  105-108; 
date  of  Chancellor  of  Ex- 
chequer's estimate,  107;  ac- 
counts by  administrative 
periods,  132-136;  universal- 
ity, miscellaneous  revenues, 
drawbacks,  etc.,  158,  159; 
method  of  estimating  re- 
ceipts, 180-182;  annual  pub- 
lications, 162,  163,  199,  376- 
378,  596-598;  Crimean  War 
and  others,  241,  242;  ex- 
traordinary expenses,  248- 
250;  Committee  of  Com- 
mons, 282-283;  vote  on 
chapters  of  budget,  300-303 ; 
annual  vote  on  budget,  save 
Consolidated  Funds,  319, 
320;  budgetary  conflict  be- 
tween two  chambers,  309- 
310,  311,  312;  vote  of  budget 
by  accounts,  330-334 ;  appro- 
priation act,  310,  311,  332, 
333,  334,  375;  appropriation 
accounts,  597,  598,  599;  ad- 
ditional credits,  supple- 
mentary estimate  and  vote 
of  credits,  375-380;  refusal 
to  vote  budget,  383-387; 
Bank  of  England,  470,  471, 
505,  506;  comptroller  and 
auditor  general  and  pay- 
master general,  504-508 ; 
closing  of  budget,  531 ; 
legislative    reports    of    ac- 


counts,     597-600 ;      resume, 

380. 
Estimates  in  England,  92,  93, 

106,  505,  597;  supplementary 

estimates,    vote    of    credits, 

377-380.^ 
Etats  Generaux  in  France,  22- 

35,  39,  51- 

Exchequer,  ancient  financial 
institution  of  England,  16, 
17,  132,  507,  508,  531. 

Expenditures,  rights  of  rep- 
resentatives of  country,  5, 
40-49 ;  cause  for  increase  of, 
188-198,  272,  274,  337,  338; 
universal  description,  132- 
168;  estimates,  188-198;  ex- 
penditures precede  receipts, 
205-207,  327;  specialization 
of  votes,  295,  303;  services 
of  treasurers  general,  468- 
494;  liquidation,  issuing  of 
vouchers  in  payment,  478- 
483 ;  payments  by  Bank,  468- 
470 ;  routine  for  expenses  in 
Italy,  508-511,  513-514;  in 
England,  504-507;  in  Bel- 
gium, 508-509;  in  Prussia, 
515;  expenditures  for  closed 
and  lapsed  fiscal  periods, 
524,  530;  final  accounting, 
567-580. 

Explanation,  of  recommenda- 
tions, 94,  200,  201. 

Extraordinary  budgets,  defini- 
tion of,  244,  245;  history 
and  creation  of,  in  France, 
235-245 ;  character  and 
abuses  of,  245-253;  do  not 
exist  in  foreign  countries 
save  by  exception,  253-261. 

Faure,  Felix,  deputy,  reporter 
of  finance  measures.  Presi- 
dent of  Republic,  130,  197, 
291,  502. 

Finance  accounts,  161,  162, 
200,  321,  400,  515,  597. 

Financial  laws,  dates  of  as- 
sembly, 96,  97;  ;  detailed 
analysis  of  titles  of,  204- 
277;  final  article,  230,  231, 


612 


INDEX 


381 ;  annexed  documents, 
232-234;  wording  of  com- 
mission on  budget,  289,  290; 
general  discussion  by  ar- 
ticle, 291-294;  definitive  law, 
318;  execution  of  financial 
law,  391-533;  control  of 
execution,  535-599- 

Financial  year,  prior  to  1789, 
100;  plan  of  1819,  99-104; 
plan  of  1888,  109-112;  finan- 
cial year  in  Italy,  Germany, 
England  and  United  States, 
104-108;  based  on  fiscal 
period,  iii,  116;  reasons  for 
modification  of  period  in 
France,  114. 

Fiscal  period,  definition  of,  13- 
15;  advantages  of  fiscal 
period,  123,  124;  historic 
abuses,  124-128;  inevitable 
delays,  actual  delays,  128- 
132;  possible  reforms,  139- 
142;  fiscal  period  opening 
before  January  i,  121 ;  clos- 
ing of  fiscal  period,  517- 
528;  expenses  of  closed 
fiscal  periods,  520-528;  an- 
nulments of  credits  from 
closed  fiscal  period,  371,  372, 
524-528;  dates  for  closing 
of  fiscal  periods,  54;  possi- 
ble abuses  of  closed  fiscal 
periods,  129,  130;  quin- 
quennial forfeitures,  lapsed 
fiscal  periods,  528-530 ; 
ordonnateurs  keep  accounts 
by  fiscal  periods,  541 ;  trans- 
fer of  accounts  of  adminis- 
trative periods  to  fiscal 
periods,  569-572. 

Floating    debt,    definition    of, 

269,  270 ;  statement  of  situa- 
tion of,  270;  resources  of, 

270,  271. 

Fouquet,  superintendent  of 
finances,      1652-1661,      537, 

539- 
Foville,  Alfred  de,  author  of 
La      Transformation       des 
Moyens    de    Transport,    le 
Morcellement,  etc.,  De  Nom- 


breux    Travaux    de    Statis- 

tique,  etc.,  171. 
Franqueville,  Comte  de,  author 

of  Le  Gouvernement  et  le 

Parlement  Britanniques,  etc., 

90,  281,  283,  311. 
Fustel  de  Coulanges,  author  of 

Institutions     politiques     de 

Vancienne  France,  25. 

Ganilh,  author  of  numerous 
financial  works,  member  of 
Tribune,  deputy  under  Res- 
toration, 46,  328. 

Gamier,  Comte  de,  a  trans- 
lator of  Adam  Smith,  mem- 
ber of  Chamber  of  Pairs 
under    Restoration,    45,    46, 

48,  53>  150,  152,  543,  552. 

Gamier,  Joseph,  author  of 
Trait  e  des  finances,  of 
Traite  d'economie  politique, 
of  Principe  de  la  population, 
etc.,  2. 

Gaudin,  Minister  of  Finance 
under  First  Empire,  y6y  126, 

477,  488. 

General  collectors,  origin  and 
transformation  of,  447,  454, 
464. 

General  inspection  of  finances, 
origin,  organization  and  role 
of,  441-444,  544,  548. 

General  movements  of  funds, 
under  direction  of  Minister 
of  Finance,  83-86,  483,  484. 

General  paying  treasurers, 
heads  of  service  in  each  de- 
partement,  445,  454,  455; 
special  collectors  for  ar- 
rondissements,  445 ;  have 
charge  of  collection  of  rolls, 
398;  movement  of  funds, 
current  account  of  treasurer, 
447-452 ;  diverse  directions 
issued  on  score  of  exceed- 
ing of  balances,  450-467; 
operations  of  Bank,  ad- 
vances to  treasury,  460-464; 
history  of  institution,  454- 
464;  project  of  reform  order 
of  day,  464-470. 


613 


INDEX 


General  statement  of  finances,. 
122,  140,  275,  276,  569,  572, 

587. 

Germany,  tax  levies  by  Na- 
poleon, 6;  budgetary  con- 
flicts, 22-24,  387;  financial 
year,  104,  105,  108;  fiscal 
year,  131 ;  universality  or 
comprehensiveness,  159,  160, 
165;  estimate  of  receipts, 
183,  184;  estimate  of  dis- 
bursements, 193;  figures  of 
budgets,  250-252 ;  annual 
vote,  317;  naval  and  military 
credits,  321-323;  additional 
credits,  374;  relation  of 
bank  to  state,  472,  SH-S^S; 
refusal  to  vote  budget,  22- 
23,  24,  387;  curators  of 
Treasury,  515-516;  su- 
preme chamber  of  accounts, 
582. 

Gladstone,  first  Lord  of 
Treasury  and  Chancellor  of 
Exchequer  in  England,  56, 
90,  107,  184,  246,  254,  255, 
311,  386. 

Goschen,  Chancellor  of  Ex- 
chequer in  England,  56,  183, 
378,  379. 

Guizot,  author  of  Uhistoire 
de  la  Revolution  d'Angle- 
terre.  Sir  Robert  Peel,  pref- 
ace to  Washington  by  M. 
Cornelis  de  Witt,  etc.,  13, 
14,  16,  18. 

Guyot,  Yves,  deputy,  minister 
of  public  works,  author  of 
Uinventeur,  La  Suppression 
des  Octrois  et  la  Politique 
Experimentale,  Ulmpot  sur 
le  Revenue,  La  Science 
economique,  Le  Budget," 
etc.,   196,  334,  364,  370. 

Hume,  David,  12,  14,  16,  18, 
43- 

Increasing  Revenues,  99,  175- 
182. 

Indirect  taxes,  rural  and  cus- 
toms    collectors,     collectors 


of  taxes  on  tobacco  and 
powders,  406-422 ;  active 
service,  traveling  collectors, 
comptrollers,  chiefs  of  post, 
inspectors,  directors,  412- 
422. 

Inspectors  of  direct  taxes, 
397;  of  indirect  taxes,  419, 
421 ;  of  registration  office, 
436;  of  customs,  430. 

Italy,  budgetary  initiative,  62; 
financial  year,  104,  105,  108; 
accounts  by  administrative 
periods,  136,  137;  develop- 
ment in  extenso  of  receipts 
and  expenditures,  164;  esti- 
mates of  receipts  and  ex- 
penditures, 257,  258 ;  budget- 
ary conflicts,  taxes  on  mill- 
ing, 306,  307;  corrective 
budget,  343,  344,  345; 
additional  credits,  343 ; 
douziemes  provisoires,  334; 
Minister  of  Treasury,  477, 
478;  supremacy  of  Minister 
of  Finance,  93,  94,  514,  515; 
preventive  control  of  Cour 
des  Comptes,  508,  511,  582, 
584;  accounts  of  unexpired 
periods,  520,  531,  533;  ac- 
counts of  patrimony,  563; 
financial  situation,  187,  257, 
258,  343,  344. 

Japan,  260,  508. 

Law  of  regulation  for  budgets, 
course  of  law  on  regulation 
in  France,  588;  delays,  588- 
592;  merit  of,  under  Res- 
toration, 592-595 ;  regula- 
tion of  accounts  in  England, 
in  Italy,  595-599. 

Le  Play,  author  of  La  Re- 
forme  sociale,  La  Constitu- 
tion   de    VAngleterre,    etc., 

91. 

Leroy-Beaulieu,  Paul,  author 
of  Trait e  de  la  science  des 
finances,  La  Repartition  des 
richesses,  Traite  theorique 
et       pratique       d'economie 


614 


INDEX 


politique,  etc.,  3,  204,  246, 
332,  345,  346. 

Liquidation  accounts,  243,  244. 

Liquidation  of  arrears,  in 
1791,  1793,  years  VI  and 
VII,  181 1,  1813  and  1816, 
126,  127. 

Liquidation  of  expenses,  481. 

Louis,  Baron,  Minister  of 
Finance  in  1815,  1819,  1830 
and  1831,  67-100,  loi,  102, 
128,  139,  140,  328,  459,  477, 

594- 
Luzzatti,    Minister   of   Treas- 
ury in   Italy,    105-1.87,   343, 
478,  511- 

Macaulay,  author  of  Essay  on 
the  History  of  England  and 
History  of  England  under 
William  the  Third ,  10,  17, 
18. 

Magne,  Pierre,  Minister  of 
Finance,  1855-1860,  1867- 
1870,  1873-1874;  author  of 
Notes  sur  I  Administration 
des  Finances,  6y,  69,  177, 
241,  242,  477. 

Marce,  Victor,  author  of 
number  of  works  on  finance, 
361,  507,  508,  511,  512,  513, 
523- 

Material    accounts,    561,    562, 

563- 

Mathieu-Bodet,  Minister  of 
Finance,  1874- 1875,  author 
of  Finances  franqaises  de 
1870  d,  1878. 

May,  Sir  Erskine,  venerable 
clerk  of  English  Parliament, 
author  of  A  constitutional 
history  of  England,  55,  161, 
281,311,383,385,386. 

Minister  of  finance,  portrait 
of,  66-70;  Thiers'  epithet, 
69;  role  of,  in  France,  70- 
73,  475-476;  Sully,  Colbert, 
Necker,  73-76 ;  Napoleon, 
76',  De  Villele,  76,  77,  78; 
Thiers,  78;  number  of,  in 
France  and  England  since 
opening     of     century,     or- 


ganization of  ministry,  79- 
89;  preparation  of  budget, 
53,  7^-72',  source  of  projet, 
96-98;  estimates  of  receipts 
and  expenditures,  169-198; 
exposition  of  purposes,  200, 
201 ;  plan  of  financial  law, 
201-234;  direction  of  service 
of  revenues  and  expendi- 
tures, 475,  476;  concentra- 
tion of  revenues,  445-449; 
movement  of  funds,  450- 
452;  decree  of  monthly  dis- 
tribution of  funds,  483,  484; 
vise  of  ministerial  ordi- 
nances, 484,  485s  requisitions 
of  ordannateurs,  492-494; 
control  of  ordannateur,  483- 
492,  543;  complete  account 
of  revenues,  general  state- 
ment of  finances,  569-574; 
permanent  committees  ex- 
ceed their  authority,  283- 
289;  supremacy  of  ministry 
in  France,  70-73,  475,  476, 
478,  483,  485,  500-504;  in 
England,  89-94 ;  in  Italy,  93, 
514,  515;  separation  of 
minister    of    treasury,    476- 

478,  569. 

Ministers,  prepare  '  budget, 
63-65;  vote  on  all  expendi- 
tures by  ministry,  295-297; 
are  ordonnateurs  in  their 
several  departments,  478 ; 
creating  of  expenditures, 
226-228,  478-480 ;  distribu- 
tion of  funds,  vise  of 
ordinances,  481-485;  central 
accounting  offices,  482,  483; 
ministerial  responsibility, 
500,  501,  566,  567;  final  ac- 
count of  expenditures,  568- 
572;  controls  to  which  min- 
isters  submit,   515,   572-585. 

Mollien,  Minister  of  Treasury, 
1806-1815;  author  of  Me- 
moir es  d'un  Ministre  du 
Tresor,  76,  457-459,  477, 
487,  545,  586,  587,  594. 

Montcloux,  de,  former  cash- 
ier of   treasury,   author  of 


61S 


INDEX 


De  la  Comptabilite  publique 
en  France,  565-567. 
Monthly  distribution  of  funds, 

483-485- 

Movements  of  funds,  concen- 
tration of  funds,  446-449; 
treasurers  general,  current 
account  of  Treasurer,  Bank 
of  France,  449-452 ;  monthly 
distribution  of  funds,  483, 
484;  vise  of  ministerial 
vouchers,  484-485;  treasury 
in  England,  in  Belgium  and 
Germany,  470-474,   504-515- 

Napoleon  the  First,  6,  39,  40, 
45,  y6,  102,  126,  127,  148, 
149,  153,  325,  326,  399,  454- 
459,  469,  477,  559,  5^0,  575- 

Necker,  author  of  Uadminis- 
tration  des  Finances  de  la 
France,  L'eloge  de  Colbert, 
etc..  Comptroller  General  of 
finances  under  Louis  the 
XVI  and  under  National 
Assembly,  4,  37,  42,  67,  68, 
69,  75,  76,  124,  125,  146,  147, 
152,  236,  286,  287,  486, 
518. 

Neymark,  Alfred,  author  of 
number  of  works  on  finance, 

89. 

Northcote,  Sir  Stafford,  form- 
er First  Lord  of  Treas- 
ury in  England,  author  of 
article  on  Finances  in  Dic- 
tionnaire  de  la  Politique,  55, 
162,  375,  376,  531. 

Ofiice  of  records,  stamps, 
mortgages  and  domains, 
collectors,  433-437;  sub-in- 
spectors, directors,  436,  437- 
438. 

Orders  for  payment,  definition 
of,  481 ;  direct  and  dele- 
gated orders,  481,  482,  485; 
issues,  vises,  485,  492;  con- 
trol of  Cour  des  Comptes  in 
England,  Belgium  and  Italy, 
531-533,  580-584;  projects 
of  reform  in  France,  500- 
504,   584,   585. 


Ordonnateurs,  principal  and 
secondary,  482 ;  attributes 
and  control  to  which  they 
are  subjected,  483-492,  541- 
543;  contrasted  with  func- 
tions of  accountable  of- 
fices, 486;  right  of  requisi- 
tion, 492-494 ;  accountings 
by  fiscal  period,  not  subject 
to  examination,  541,  543, 
565-567;  not  bonded,  566, 
567;  verifications  to  which 
they  are  subjected;  docu- 
ments which  they  produce, 
548-549,  565-580;  infrac- 
tions and  lapses  in  their 
service;  projects  of  reform, 
495-504- 

Ouvrard,  speculator,  455-457, 
594- 

Parlement,  budgetary  pre- 
rogatives of,  5;  antiquity 
of,  in  England,  9,  10;  budg- 
etary initiative  of,  53,  63; 
antagonism  of,  to  executive 
power  in  France,  134;  re- 
ceives budget  plan,  96,  279, 
280;  discussion  and  vote 
by  the  deputies,  291,  294; 
by  upper  chamber,  306,  318; 
two  chambers  form  Parlia- 
ment, 306;  right  to  vote  ad- 
ditional credits,  356,  357; 
right  to  refuse  to  vote 
budget,  381-389;  final  regu- 
lation of  budgets,  586-595; 
supremacy  of,  guaranteed 
by  budgetary  formalities, 
605,  606. 

Farlements  under  ancient 
regime,  35-38.  • 

Passy,  Hippolyte,  Minister 
of  Finance  in  1834,  1839- 
1844,  author  oi  Des  formes 
de  gouvernement,  of  the 
article  Impot,  in  the  Dic- 
tionnaire  d'economie  poli- 
tique, etc.,  205,  206. 

Paymaster  General  in  Eng- 
land, 136,  504-507,  531. 

Payments,  450-452,  483-515- 


616 


INDEX 


Petitions  of  Etats  Generaux, 
39-42. 

Peytral,  deputy.  Minister  of 
Finance  in  1888,  1889,  1893, 
1898,  71,  108,  109,  no,  III, 
263,  265,  491,  503. 

Physiocrats,  32,  33. 

Picot,  Georges,  author  of 
L'histoire  des  Etats  genS- 
raux,  26,  2y,  29,  31. 

Poincare,  Raymond,  senator, 
Minister  of  Finance,  172, 
293»  341,  366,  369,  499. 

Pouyer-Quertier,  Minister  of 
Finance  in  1871  and  1872, 
66,  491. 

Preparation  of  budget,  agents 
who  prepare  budget,  51-94; 
time  of  preparation  of 
budget,  96,  114;  mode  of 
preparation  of  budget;  uni- 
versality ;  correct  esti- 
mates, 144-198;  details  of 
budget  plan,  199-234. 

Public  debt,  special  budget 
of,  158,  321 ;  composition 
of,  207,  208;  payment  of 
charges  of,  by  Bank  in 
England,  470-472 ;  in 
France  under  Restoration, 
471 ;  account  of  debt, 
572. 

Public  discussion  of  Financial 
Laws,  general  and  by  ar- 
ticle, 291-294,  318. 

Quinquennial  forfeitures,  528- 
530- 

Railways,  of  state,  218,  219; 
guarantees  of  interest,  228- 
229,  275,  277;  definition  of, 
275;  work  authorized  by 
financial  laws,  228-230;  re- 
ceipts and  expenditures  of, 
carried  in  Belgian,  Italian, 
Prussian  and  Austrian 
budgets,  163-165. 

Ramel,  Minister  of  Finance, 
1 796- 1 799,  author  of  Fi- 
nances de  la  France,  of 
Change  du  cours  des  effets 


publics  et  de  Vinteret  de 
V argent,  4,  287,  519. 

Referees  for  Cour  des 
Comptes,  578. 

Reports  of  credits,  law, 
February  27,  1912,  524-533. 

Requisition,  right  of,  492-494. 

Restoration,  right  to  vote  ex- 
penditures, 45-49;  ordinance 
of  Villele,  77-78;  plan  to 
change  date  for  opening  of 
fiscal  year,  99-104;  closing 
of  fiscal  period,  120,  517, 
518;  rules  for  universality, 
148-152;  plan  relating  to  ac- 
counts by  administrative 
periods,  139-141;  independ- 
ent of  financial  bureaus, 
149;  special  budgets  on 
debt,  158;  inauguration  of 
mode  for  estimating  re- 
ceipts, 175;  extraordinary 
operations,  237,  307;  final 
articles,  21,  231;  specializa- 
tion by  ministries  and  by 
sections,  297-299;  project 
to  create  a  Consolidated 
Fund,  322;  douziemes  pro- 
visoires,  328,  330 ;  additional 
credits,  350,  351;  com- 
plementary credits,  350, 
360;  theories  on  subject  of 
refusing  to  vote  budget, 
286-287 ;  organization  of 
general  inspection  of  fi- 
nances, 441-442;  general 
collectors,  459,  460;  pay- 
ment of  charges  on  debt  by 
Bank,  471 ;  reestablishment 
of  unity  of  ministry  of 
finance,  477;  transfer  of 
credits,  499;  ministerial  re- 
sponsibility, 500,  501,  566, 
567 ;  parliamentary  attri- 
butes of  Cour  des  Comptes, 
568-580;  creation  of  law 
regulating  budgets,  merits 
of  their  discussion,  586-587, 
592-595 ;  resume,  595. 

Revenues,  rights  of  repre- 
sentatives of  country,  39, 
40;    general   description   of 


617 


INDEX 


revenues,  146-152;  special 
revenues  for  ministries,  152- 
161 ;  budgetary  estimates, 
automatic  system,  increases, 
etc.,  169,  188;  precedence  of 
expenditures  over  receipts, 
205-206;  division  of,  in  gen- 
eral budget,  208-215;  an- 
nexed budgets,  215-221 ;  last 
articles  of  financial  law,  230, 
231 ;  centralization,  445- 
449;  final  accounting  of 
revenues,   569. 

Revenues  to  order,  211-214. 

Revolution  of  1789,  budgetary 
prerogative,  39-44;  absence 
of  budget,  encroachments 
on  executive  power,  44; 
arbitrary  liquidations,  426, 
518,  519;  extraordinary  re- 
sources, 236 ;  permanent 
committees;  suppression  of 
ministerial  authority,  284- 
287;  vote  on  budgets  en 
bloc,  295;  plan  for  Con- 
solidated Fund  by  Mirabeau, 
322;  committee  on  treasury, 
501 ;  execution  of  old  tax 
farmers,  539,  540;  bureau 
and  commission  on  ac- 
countancy, 501,  556-559. 

Ribot,  Alexandre,  deputy,  re- 
porter general  on  budget. 
Minister  of  Finance,  1895, 
59,  71,  72,  78,  97,  109,  180, 
183,  291,  316.     . 

Rolls  for  direct  taxes,  391-404. 

Rouvier,  Maurice;  deputy. 
Minister  of  Finance,  1887, 
1 889- 1 905,  78,  174,  218,  248, 
249,  251,  362,  368,  381,  462, 
463-467. 

Roy,  Minister  of  Finance, 
1818-1819,  1828,  46,  47,  48, 
70,  520,  525,  526,  576,  586, 

594. 
Russia,  financial  year,  109; 
rules  of  universality,  164; 
general  and  extraordinary 
budgets,  258 ;  additional 
credits,  374,  375 ;  ministry  of 
control,  581,  582. 


Say,  Jean  Baptiste,  author  of 
Cours  complet  d'economie 
politique,  etc.,  3,  6,  7,  31, 
45,  388,  389,  546. 

Say,  Leon,  Minister  of  Fi- 
nance, 1873,  1875-1879,  1882, 
author  of  La  politique 
financiere  de  la  France, 
Les  solutions  democratiques 
de  la  question  des  impots, 
Les  Finances,  etc.,  2,  4,  8, 
9,  109,  no,  III,  112,  117, 
120,  125,  133,  142,  144,  145, 
165,  166,  178-180,  195,  211, 
218,  243,  249,  263,  265,  289, 

290,  327,  545,  547,  563- 

Schelle,  G.,  author  of  Du 
Pont  de  Nemours  et  VEcole 
physio cratique,  31,  33. 

Secretary  of  Treasury  in 
United  States,  62,  63,  185, 
186,  284. 

Senate,  budgetary  role  of 
upper  chamber  in  diflFerent 
countries,  306-318;  budget- 
ary conflicts  between  the 
two  chambers  in  Italy,  306- 
307;  in  United  States,  307- 
309;  in  England,  309-311;  in 
France,  311-318;  annual 
commission  (committee)  on 
finance,  283;  public  discus- 
sion, vote,  317,  318. 

Special  collectors,  nominated 
by  treasurer  general,  444- 
447;  chiefs  of  collectors, 
398,  403,  446;  have  charge 
of  rolls,  398;  they  collect 
these  rolls,  500;  all  collec- 
tions are  centralized,  444- 
447;  stub  receiots  are  is- 
sued, 445;   reward  of,  446. 

Specialization,  definition,  ad- 
vantages of,  157-168;  place 
of,  is  not  in  ordinary  budget, 
167;  specialization  of  opera- 
tions of  annexed  budgets, 
215-221. 

Special  services  of  Treasury, 
267-277. 

Sully,  Superintendent  of 
finances       under       Henry 


618 


INDEX 


IV,    author    of    Economies 
Royales,  30,  31,  73,  76. 
Superintendents   of   Finances, 
tragic  end  of  a  large  num- 
ber of,  535-539- 

Taxes,  budgetary  prerogative, 
5-9,  39,  40,  46-49,  208-215, 
230,  231 ;  insertions  in 
budget  of  grand  totals  of, 
146-152;  mode  of  estimat- 
ing of,  1 71 -1 88;  collection 
of  direct  and  indirect  taxes, 
customs  dues,  and  registra- 
tion fees,  391-441 ;  taxes 
irregularly  collected  from 
beginning  of  century,  36, 
40. 

Thiers,  minister  and  presi- 
dent of  Council  under  July 
Monarchy;  President  of  re- 
public after  1870,  69,  78, 
240,  242,  243,  302,  353,  354, 
500. 

Tirard,  deputy.  Minister  of 
Finance,  1882-1883,  1888,  78, 
180,   181,  262,  318. 

Tocqueville,  Alexis  de,  author 
of  L'ancien  regime  et  la 
Revolution,  35. 

Treasury,  definition  of,  267; 
relation  to  budget ;  deficits  of 
treasury;  floating  debt,  268- 
271 ;  concentration  of  funds 
in  treasury,  447-452;  cur- 
rent account  of  treasury, 
447-449;  account  opened  at 
bank,  450-452;  exceeding  of 
credits  has  caused  deficits 
in  treasury,  268,  269,  497; 
account  of  operations  of 
treasury,  569-572;  bureau  of 
treasury  in  England,  89-93, 
106,  133-136,  324,  504- 
507;  committees  of  treasury 
under  Revolution,  44 ;  opera- 
tions of  treasury,  153,  155, 
470,  474. 

Uncovered  balances  of  Treas- 
ury, 268,  269. 


United  States,  conquest  of 
budgetary  prerogative  of, 
18-20;.  budgetary  initiative, 
committees  of  House  of, 
62,  63,  283,  284,  289;  finan- 
cial year,  105-108;  exceed- 
ing budget,  185-186;  an- 
nual vote,  319;  budgetary 
conflict,  307-309. 

Universality,  definition  of, 
146;  farming  out  of  budgets 
under  ancient  regime,  146- 
148;  cost  of  collecting 
taxes,  148-152;  reign  of 
universality  in  French 
budget,  152-161 ;  and  foreign 
budgets,  161-164;  merits  of, 
164-166;  regrettable  excep- 
tions in  France,  158-161. 

Villele,  de.  Minister  of 
finance  and  president  of 
Council,  1821-1828,  66,  76- 
78,  loi,  119,  120,  149,  152, 
175,  297,  326,  350,  362,  488/ 
495,  496,  519,  520,  522,  568, 
571,  574,  594,  595- 

Vote  on  Budget,  public  dis- 
cussion and  discussion  by 
article,  291-294;  budgetary 
specialization,  295-304;  vote 
on  final  budget,  304,  318; 
votes  on  account,  325-334; 
annual  vote  of  budgets,  ex- 
ceptions, 319-334;  vote  by 
Upper  House,  306-318;  vote 
on  law  of  regulation  of 
budgets,  488-592. 

Vuitry,  Adolphe,  author  of 
Etudes  sur  le  regime  finan- 
cier de  la  France,  of  De- 
sordre  des  finances  d>  la  fin 
du  regne  de  Louis  XIV  et 
au  commencement  du  regne 
de  Louis  XV,  25,  26,  27, 
342,  343,  535,   536. 

Wells,  David,  high  function- 
ary in  internal  revenue  de- 
partment of  United  States, 


619 


Publications  of  the  Institute  for  Government  Research 

Studies  in  Administration 

THE  FINANCIAL   ADMINISTRATION  OF 
GREAT  BRITAIN 

By  WILLIAM  F.  WILLOUGHBY,  Director  of  the  Institute  for 
Oovernment  Research,  Constitutional  Adviser  to  the  Chinese 
Republic,  Professor  of  Jurisprudence  and  Politics,  Princeton 
University;  WESTEL  W.  WILLOUGHBY,  Professor  of  Po- 
litical Science,  Johns  Hopkins  University ;  and  SAMUEL 
McCUNE  LINDSAY,  Professor  of  Social  Legislation,  Columbia 
University.  Introduction  by  A.  LAWRENCE  LOWELL,  Presi- 
dent, Harvard  University,  8vo.  Cloth,  $2.75  net. 

This  is  the  first  authoritative  detailed  account  of  the  system  of  finan- 
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developed  and  foremost  budgetary  system  in  the  world.  It  has  been 
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They  have  interpreted  this  experience  in  terms  of  its  application 
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historical  development  of  the  British   Budget. 

THE  BUDGET 

By  RENfi  STOURM,  Member  de  VInstitut,  Professeur  A  I'Ecole  Des 
Sciences  Politiques.  Translated  by  Thaddeus  Plazinski,  and 
Edited  by   Walter  F.  McCaleb.     $3.75  liet. 

This  is  a  translation  of  the  Seventh  edition  ^of  Professor  Stourm's 
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Principles  of  Administration 

PRINCIPLES  GOVERNING  THE  RETIREMENT 
OF  PUBLIC  EMPLOYEES 

By  LEWIS  MERIAM,  A.M.,  LL.B.,  Member  of  staff  of  Institute 
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